Tips & Tricks: Simple Interest & Compound Interest

# Simple Interest and Compound Interest Tips and Tricks for Government Exams

## Introduction

• Interest
When some one take up some money from other for the personal or commercial purpose we pay some additional money to him after a certain period of time is called Interest. So, we can also called this Interest as Simple Interest.
• Principal
So, the concept of Principal is very simple. When money borrow for a certain time period called Principal or Sum.
• Amount
The Addition of Simple Interest and Principal is called Amount.
Amount (A) = Simple Interest (SI) + Principal (P).
Simple Interest (SI) = Amount (A) – Principal (P).
• Per annual means
Per annual means for a year.
• Few general terms of Interest
• P = Principal
• R = Rate per annual
• T = Number of years

### Theory

• We try to provide all types of shortcut tricks on simple interest and compound interest here. Visitors are requested to carefully read all shortcut examples. These examples here will help you to better understand shortcut tricks on simple interest and compound interest.
• First of all do a practice set on math of any exam. Choose any twenty math problems and write it down on a page. Do first ten maths using basic formula of this math topic. You also need to keep track of the time. Write down the time taken by you to solve those questions. Now read our examples on simple interest and compound interest shortcut tricks and practice few questions. After finishing this do remaining questions using simple interest and compound interest shortcut tricks. Again keep track of timing. This time you will surely see improvement in your timing. But this is not enough. You need to practice more to improve your timing more.

### Formula

1. SI = P x R x T/100
2. Principal = Simple Interest × 100/ R × T
3. Rate of Interest = Simple Interest  × 100 / P × T
4. Time = Simple Interest × 100 / P × R
5. If the rate of Simple interest differs from year to year, then
Simple Interest = Principal × (R1+R2+ R3…..)/100
• The four variables in the above formula are: SI = Simple Interest P = Principal Amount (This the amount invested)T = Number of years R = Rate of interest (per year) in percentage
• A sum of money is divided into n parts in such a way that the interest on the first part at r1% for t1 years, on the second part at r2% for t2 years, on the third part at r3% for t3 years, and so on, are equal. Then the ratio in which the sum is divided in n part is: 1/r× t: 1/r2 × t: 1/r× t3

### Solved Examples

Question for Tips & Tricks: Simple Interest & Compound Interest
Try yourself:Rs. 12000 was invested for 2 years, partly in scheme A at the rate of 5% SI per annum and partly in scheme B at the rate of 8% SI per annum. The total interest received at the end was Rs.1800. What amount of money was invested in scheme A ?

Question for Tips & Tricks: Simple Interest & Compound Interest
Try yourself:A sum was put at a certain rate of interest for four years. Had it been put at a rate of interest 4% higher than the previous rate of interest, it would have fetched Rs. 80 more. What is the sum ?

Question for Tips & Tricks: Simple Interest & Compound Interest
Try yourself:

What is the difference between the CI and SI on Rs.6500 at the rate of 4 pcpa in 2 yrs ?

Question for Tips & Tricks: Simple Interest & Compound Interest
Try yourself:

The CI on a certain sum at 10% pa for 2yrs is Rs.6548. What is SI on the sum of money at 7%pa for 4 yrs(approx) ?

The document Simple Interest and Compound Interest Tips and Tricks for Government Exams is a part of the Bank Exams Course Tips & Tricks for Government Exams.
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## Tips & Tricks for Government Exams

65 videos|65 docs

## FAQs on Simple Interest and Compound Interest Tips and Tricks for Government Exams

 1. What is simple interest?
Ans. Simple interest is a type of interest calculated only on the principal amount. It is a fixed percentage of the principal and is not compounded over time. The formula to calculate simple interest is: Simple Interest = (Principal x Rate x Time)/100.
 2. What is compound interest?
Ans. Compound interest is a type of interest that is calculated on both the principal amount and any accumulated interest from previous periods. It is compounded over time, which means that interest is added to the principal, and the new total amount becomes the basis for calculating the next period's interest. The formula to calculate compound interest is: Compound Interest = Principal x (1 + Rate/100)^Time - Principal.
 3. What is the difference between simple interest and compound interest?
Ans. The main difference between simple interest and compound interest lies in the way interest is calculated. Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and any accumulated interest. As a result, compound interest tends to grow faster than simple interest over time.
 4. When is simple interest preferred over compound interest?
Ans. Simple interest is generally preferred over compound interest when the interest rate is low and the time period is short. It is commonly used for short-term loans, such as personal loans or payday loans, where the interest is calculated based on the principal amount only. In such cases, simple interest provides a simpler and more straightforward calculation.
 5. When is compound interest preferred over simple interest?
Ans. Compound interest is preferred over simple interest when the interest rate is high and the time period is long. It is commonly used for long-term investments, such as fixed deposits or retirement savings accounts, where the interest is compounded over time. Compound interest allows for exponential growth of the investment, resulting in higher returns compared to simple interest.

## Tips & Tricks for Government Exams

65 videos|65 docs

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