Compound Intrest

Fast trick to find Compound Intrest

Q1) Find the effective rate of interest , corresponding to a nominal rate of 10% per annum.payable half yearly compounding.

By formula-

Effective Annual Rate = Yearly rate + (Half-Yearly Rate)2 / 100

Let the sum be Rs 100
P = Rs 100
r = 10 % Yearly = 5 % Half-Yearly
t = 1 Year = 2 Half - years

Putting the value in formula:

Effective Annual Rate = Yearly rate + (Half-Yearly Rate)n / 100

= 10 + 52 / 100

= 10 + 25 / 100

= 10 + 0.25

= 10 + 0.25

Effective Annual Rate = 10.25%


Q2) Manohar deposited Rs 3000 at 6% p.a. compound interest , Find the compound interest after 2 year?

P = Rs 3000
r = 6 % Yearly
t = n = 2 Year
C.I.= ?

This formula is used only when time is 2 years :

Compound Interest = P / 100 [ 2 * r + r2 / 100]

Putting the value in formula:

= 3000 / 100 [ 2 * 6 + 62 / 100]

= 30 [ 12 + 36 / 100 ]

= 30 [ 12 + 0.36 ]

= 30 * 12.36

= Rs 370.8

After 2 years Compound interest will be Rs 370.8


Q3) The compound interest on a sum at 3000 p.a. for 4% years is Rs 2.Find the sum ?

P = P
r = 4 % Yearly
t = n = 2 Year
C.I.= Rs 3000

This formula is used only when time is 2 years :

Compound Interest = P / 100 [ 2 * r + r2 / 100]

Putting the value in formula:

3000 = P / 100 [ 2 * 4 + 42 / 100]

3000 = P / 100 [ 8 + 16 / 100]

3000 = P / 100 [ 8 + 0.16 ]

3000 = P / 100 * 8.16

3000 * 100 / 8.16 = P

Rs 36764.705882353 = P

Sum is Rs 36764.705882353


Q4) The sum becomes Rs 1000 in 2 years at 14% p.a. compound interest .Find the sum ?

P = P
r = 14 % Yearly
t = n = 2 Year
A= Rs 1000

This formula is used only when time is 2 years :

Compound Interest = P / 100 [ 100 + 2 * r + r2 / 100]

Putting the value in formula:

1000 = P / 100 [ 100 + 2 * 14 + 142 / 100]

1000 = P / 100 [ 128 + 196 / 100]

1000 = P / 100 [ 128 + 1.96 ]

1000 = P / 100 * 129.96

1000 * 100 / 129.96 = P

Rs 769.4675284703 = P

Sum is Rs 769.4675284703