Javatpoint Logo
Javatpoint Logo

Aptitude Compound Interest Concepts and Formulas

Points to remember:

1) Compound Interest: The addition of interest to the principal sum each year or some fixed time period is known as compounding. So, the compound interest is the interest on interest. The interest of each year or some fixed time period is added to the principal sum and the new amount becomes the principal for the next year and interest is calculated on the increased amount for the next year.

2) In case of compound interest, when interest is compounded annually, the amount is given by:

Amount (A) = P Compound interest Sign 1 +Apti Compound interest 1Compound interest Sign 2 t

Where, P= Principal

r = Rate of interest

t = time/number of years

And, Compound Interest = Amount (A) - Principal (P)

Compound Interest (C.I) = PCompound interest Sign 1 +Apti Compound interest 2Compound interest Sign 2 t- P

= PCompound interest Bracket Compound interest Sign1 +Apti Compound interest 3Compound interest Sign 2t_1Compound interest Sign 2Compound interest Bracket 2

And, Rate of interest (r) = Compound interest Bracket Compound interest SignApti Compound interest 4Compound interest Sign 21/t-1Compound interest Bracket 2% p.a.

3) Compound interest can be compounded half-yearly and quarterly, etc. Accordingly, the formula varies;

  • When interest is compounded half-yearly:

Amount (A) = P Compound interest Sign1 +Apti Compound interest 5Compound interest Sign 22t

Compound Interest (C.I.)=P Compound interest BracketCompound interest Sign1 +Apti Compound interest 102Compound interest Sign 2 2t - 1Compound interest Sign 2 Compound interest Bracket 2

And, Rate of interest (r) = 2 ∗ 100 Compound interest Bracket Compound interest SignApti Compound interest 6Compound interest Sign 2Apti Compound interest 7∗ 2 - 1Compound interest Bracket 2 % p.a.

4) When interest is compounded quarterly:

Amount (A) = P Compound interest Sign1 +Apti Compound interest 8Compound interest Sign 24t

Compound Interest (C.I.) = P Compound interest Bracket Compound interest Sign1 +Apti Compound interest 9Compound interest Sign 24t - 1Compound interest Sign 2Compound interest Bracket 2

And, Rate of interest (r) = 4 ∗ 100 Compound interest Bracket Compound interest SignApti Compound interest 10Compound interest Sign 2Apti Compound interest 11∗ 4 - 1Compound interest Bracket 2 % p.a.

5) When interest is compounded annually but time is in fraction i.e. 3 Apti Compound interest 12 years, then;

Amount = P Compound interest Sign1 +Apti Compound interest 13Compound interest Sign 23*Compound interest Sign1 +Apti Compound interest 14Compound interest Sign 2

So, in general, if the interest is compounded n times a year;

Amount (A) = P Compound interest Sign1 +Apti Compound interest 15Compound interest Sign 2n*t

Compound interest (CI): P Compound interest Bracket Compound interest Sign1 +Apti Compound interest 16Compound interest Sign 2n∗t - 1Compound interest Sign 2Compound interest Bracket 2

And, Rate of interest (r) = n ∗ 100 Compound interest Bracket Compound interest SignApti Compound interest 17Compound interest Sign 2Apti Compound interest 18∗ n - 1Compound interest Bracket 2 % p.a.

6) When there are different rates of interest for different years e.g. r1%, r2%, r3% for 1st, 2nd and 3rd year respectively, then;

Amount = P Compound interest Sign1 +Apti Compound interest 19Compound interest Sign 2 Compound interest Sign1 +Apti Compound interest 20Compound interest Sign 2 Compound interest Sign1 +Apti Compound interest 21Compound interest Sign 2


Some quicker methods:

1) If a sum becomes P times in t years, the rate of compound interest r is = 100 [(P) 1/t - 1]

2) If C.I. is given, we can find the S.I. by the formula;

Simple Interest = Apti Compound interest 22∗ Compound interest

3) If C.I. and S.I. are given in the question, we can find the rate of interest by the formula;

Rate of interest = 2 ∗ Apti Compound interest 23∗ 100

4) If the difference between the C.I. and S.I. on a certain sum of money for 2 years at r% is Rs. X, the sum is given by;

Sum = X Compound interest SignApti Compound interest 24Compound interest Sign 22

5) If the difference between C.I. and S.I. on a certain sum for 3 years at r% is Rs. X, the sum is given by;

Sum = Apti Compound interest 25

6) If a certain sum of money grows to Rs. X in n years and Rs. Y in (n+1) years, the rate of interest is given by;

Rate of interest:Apti Compound interest 26

7) If a sum of money X becomes Y in t1 years at compound rate of interest, after t2 years it will become;

Rs.Apti Compound interest 27

8) If a loan of Rs. X at r% rate of interest C.I. is to be paid back in n equal yearly installments, the value of each installment is given by;

= Apti Compound interest 28


Compound Interes Aptitude Test Paper 1
Compound Interes Aptitude Test Paper 2





Help Others, Please Share

facebook twitter google plus pinterest

Learn Latest Tutorials


Preparation


Trending Technologies


B.Tech / MCA