## Simple Interest and Compound interest shortcut formulas and trick for bank exams

Every bank exam contains**simple interest and compound interest questions**.Every candidate can solve these questions.But in bank exams, time management is an important factors.

**Shortcut formulas**play an important role in time management.Here we are sharing important

**formulas and shortcuts for solving simple interest and compound interest faster**.Hope this will save your few valuable minutes during next exam.

###
**Simple Interest**

Simple interest is given by the formula

**I= PRT /100**
P=PRINCIPLE R=RATE OF INTEREST per annum T=TIME PERIOD

- If principle doubles in T years,then R=100/T
- If principle triples in T years ,then R=200/T
- if principle becomes four times in T years,then R=300/T

###
**Compound Interest**

Compound interest is given by

**,**
Amount after T years ,

- If rate is R1,R2 & R3 for 1st,2nd and 3rd year respectively then amount is ,

- If difference of S.I and C.I is given for 2 years

Example:Difference between simple interest on certain sum of money for 2 years at 4% and compound interest for same period at same rate is 200.Find the sum

Ans:Principle=difference*(100/2)^2=200*100/2*100/2=RS 500000.

- If amount compounded half yearly R will be replaced by R/2 and T will be replaced by 2T

- If amount compounded quarterly R will be replaced by R/4 and T will be replaced by 4T

**:Find the compound interest of Rs.10,000 in 9 months at 4%per annum interest payable quarterly.**

*Eg*
Rate=4/4=1%,Time period= 9 months=3 quarter years.

CI=10,000*((1+1/100)^3 -1)=303.01.

### Shortcut for finding compound interest

In some cases evaluation of C.I using formula will be time consuming. Here is an alternate method for calculating compound interest.

Let Principle = P, Compound interest % = x % per annum , Time period=T

If T=2 ,

Total interest percentage for the first year=x,

Total interest percentage for the second year=x + x% of x= x+ (x*x/100)

Then effective percentage of interest =2x + x*x/100

Then C.I=(2 x + x*x/100) % of P= P*[(2x + x*x/100)/100]

If T=3

Total interest percentage for the first year=x,

Total interest percentage for the second year=x + x% of x= x+ (x*x/100)

Total interest percentage for the third year= x + x % of ( x + x+ x*x/100) =x+ x*( x + x+ x*x/100)/100)

Then effective percentage of interest= x+ x+ (x*x/100) + x+ x*( x + x+ x*x/100)/100)= 3x+ (x*x/100) +x*( 2x + x*x/100)/100)

You may be finding formulas lengthy, but you will find this method simpler after practicing some problems.Especially if T=2, then this method will be much faster than conventional method using the commonly used formula.

Now let us solve two problems using above method.

Example 1 : What is the compound interest paid on a sum of Rs.3000 for the period of 2 years at 10% per annum.

- 630
- 620
- 610
- 600

Solution= Interest % for 1st year= 10

Interest % for 2nd year= 10+ 10% of 10= 10+ 10 *10/100=11

Total % of interest= 10 + 11=21

Total interest = 21 % 3000= 3000 * (21/100)= 630

So, answer is option 1

Example 2:What is the compound interest paid on a sum of Rs.3000 for the period of 3 years at 10% per annum.

- 900
- 930
- 990
- 993

Solution= Interest % for 1st year= 10

Interest % for 2nd year= 10+ 10% of 10= 10+ 10 *10/100=11

Interest % for 3rd year= 10+ 10%(10+11)=10+ 2.1=12.1

Total % of interest= 10 + 11+12.1=33.1

Total interest = 33.1 % 3000= 3000 * (33.1/100)= 993

So, answer is option 4

### Simple interest, compound interest practice questions

1.A man derives his income from an investment of Rs.2000 at a certain rate of interest and Rs.1600 at 2% higher. The whole interest in 3 years is Rs.960. Find the rate of interest.

Answer:8%

2.A man buys a house and pays Rs.8000 cash and Rs.9600 at 5 year credit at 4% per annum simple interest. Find the cash price of the house.

Answer: Rs.16000

3.The simple interest on a certain sum of money for 3 years at 4% is Rs.303.60. Find the compound interest on the same sum for the same period at the same rate.

Answer:315.90

4.If a certain sum given on simple intrest doubles in 20 years. In how many years will it be four times?

Answer:60 years

5.A sum of money placed at compound interest doubles itself in 4 years. In how many years will it amount to 8 times.

Answer:12 years

If you need explanation for any of the above practice questions you can comment below.Share this article on "

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