Compound Interest Solved Questions For IBPS PO , SBI CLERK & other Banking Exams

Compound Interest Solved Questions For IBPS PO , SBI CLERK

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Compound Interest Solved Questions

In case of Compound interest, the interest is added to the principal at the end of each period to arrive at the new principal for the next period. In simple words we can say, the amount at the end of first year will became the principal for the second year & so on.

Let us understand the difference between S.I & C.I with the help of this eg when 100Rs is lended for 3 years at the rate of 10% per annum.

Formulae:

Let P=principal, Rate= R% per annum Time = n years

1. If the interest on the sum borrowed is compounded annually,

Amount=P [1+(R/100)]ⁿ

2. If the interest on the sum borrowed is compounded half yearly,

Amount=P [1+((R/2)100)]²ⁿ

3. If the interest on the sum borrowed is compounded quarterly,

Amount=P[1+((R/4)100)]⁴ⁿ

4. When interest rates are different for different years R1%,R2%,R3% for 1st, 2nd, 3rd yrs respectively

Amount=P [1+(R1/100)][1+(R2/100)][1+(R3/100)]

5. Present Worth of Rs.X due n years is

Present Worth=X/[1+(R/100)]ⁿ

For practice of S.I & C.I & more, Click at Online Banking Preparation

Let us understand the concept of compound Interest with the help of some egs:

Ques: Find CI on Rs.6250 at 16% per annum for 2yrs, compounded annually.

Sol:Rate R=16,n=2, Principle=Rs.6250

Amount=P[1+(R/100)]ⁿ

=6250[1+(16/100)]²

=Rs.8410

C.I=Amount-P

=8410-6250

=Rs.2160

Ques: Find C.I on Rs.16000 at 20% per annum for 9 months compounded quarterly.

Sol:Amount=P[1+(R/100)]ⁿ

=16000[1+(5/100)]³

=Rs.18522

C.I=18522-16000

=Rs.2522

Ques: A sum of money doubles itself at C.I in 15yrs.In how many yrs will it become 8 times?

Sol: Compound Interest for 15yrs P[1+(R/100)]¹⁵

P[1+(R/100)]¹⁵=2P

=P[1+(R/100)]ⁿ=8P

=[1+(R/100)]ⁿ=8

=[1+(R/100)]ⁿ=23

=[1+(R/100)]ⁿ=[1+(R/100)]^15*3

Since [1+(R/100)] =2

n=45yrs

 Learn Simple Interest questions & answers here..

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