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# Shortcut Tricks on Simple Interest and Compound Interest

What is 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. This type of problem are given in Quantitative Aptitude which is a very essential paper in banking exam. Under below given some more example for your better practice.
Anything we learn in our school days was basics and that is well enough for passing our school exams. Now the time has come to learn for our competitive exams.
For this we need our basics but also we have to learn something new. That’s where shortcut tricks are comes into action.
When money borrow for a certain time period called Principle or Sum.
The Addition of Simple Interest and Principle is called the Amount.
A = S.I + P ( Principle ).
S.I = A ( Amount ) – P ( Principle )
Per annul means ?
Per annul means For a year.
P = Principle
R = Rate of per annul
T = Number of years
When we Add Simple Interest into Principle. It becomes into Amount.
Formulas Need to Remember
S.I =( P X R X T / 100 )
Here, P = Principle.
R = Rate per annul.
T = Number of years.
Formula: 1
In case S.I ( Simple Interest )T ( Number of years ) and R (Rate per annul ) are given in Question then we can easily find the Principle or Sum.
P = ( S.I X 100 / R X T ).
Formula: 2
In case S.I ( Simple Interest ), T ( Number of years ) and P ( Principle )are given in question then we can easily find the R (Rate per annul ).
R = ( S.I X 100 / P X T ).

Example Question 1:
Find the simple interest on Rs 500 for 5 years at 5 per cent ?
SI = 500 x 5 x 5 / 100
Simple interest in 5 years is Rs 125.
Compound Interest Shortcut Tricks

Some important formula of Compound Interest
A = Amount.
P = Principal.
R = Rate of Interest.
N = Number of Years.

Type I : Interest compounded yearly :
A = P ( 1 + r / 100 )n

Type II : Interest compounded half – yearly :
Amount = P [ 1 + r / 2 / 100 ]4n or = P = [ 1 + r / 200 ] 2nType III : Interest compounded quarterly :
Amount = P [ 1 + r / 4 / 100 ] or =P [ 1 + r / 400 ] 4n
In Compound Interest problems asked in exams up to the period of 3 years.
In case we apply basic formula: Amount = Principle ( 1 + r / 100 )n here r = Rate and n = Time
As consider if Principle is Rs. 1, then the it will be in first year and second and third years.
( 1 + r / 100 )1
( 1 + r / 100 )2
( 1 + r / 100 )3
If the rate of interest is 3%, then the value will be …….
In first year = (23 / 21 ) = 23 / 21.
In second year = ( 23 / 21 )2 = 529 / 441.
In Third year = ( 23 / 21 )3 = 12167 / 9261.

## Example

A. Find the present value of an investment if the future value is \$1,000. The investment pays 4.5% compounded semiannually for seven years.

r = 0.045
ppy = 2
i = r/ppy = 0.045/2 = 0.0225
t = 7
n = (t)(ppy) = (7)(2) = 14
P = ?
A = 1,000
I

Example . = A. Given an investment of \$3,000 at 5% compounded quarterly for 6 years, find the interest earned and the future value. Prepare a table showing the growth of the account balance and illustrate that growth with a chart.

r = 0.05
ppy = 4
i = r/ppy = 0.05/4 = 0.0125
t = 6
n = (t)(ppy) = (6)(4) = 24
P = 3,000
A = ?
I = ?