Aptitude - Compound Interest - Discussion

Shortcut to find out a compound interest by ratio method.

For 3yrs, the ratio is 331 ie find 12% of 25000,
(12*25000)/100 = 3000,
Then find 12% of 3000.
(12*3000)/100 = 360,

Then find 12% of 360.
(12*360)/100= 43.2.

Now multiply by the ratio and then add.
3000*3 + 360*3 + 43.2*1 = 9000 + 1080 + 43.2 = 10123.3.

12% = 12/100 = 3/25.
p = 25000.

Solve --- 25000x3/25 = 3000 first interest.

1st = 3000.
2nd = 3000 + 360. (3000x3/25=360).
3rd = 3000 + 360 + 360 + 43.20. (360x3/25=43.20).
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9000+720+360+43.20 = 10123.20.

Its answer are exactly correct.
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Shortcut:

P = 25000, T = 3 years. And R = 12 pcpa, C.I = ?

C.I = 12% of 25000 = 3000.

12% of 3000 = 360.

12% of 360 = 43.20.

i.e 3(3000) + 3(360) + 43.2 = 9000+1080 +43.20 = 10123.20 (since time = 3 years).

Using percentages

Shortcut method for C.I when P, R%, time is given to find out CI:

1st year:-10% of 25000+2% of 25000=2500+250*2=2500+500 = 3000.
2nd year:-10% of 28000+2% of 28000=2800+280*2=2800+560 = 3360.
3rd year:_10% of 31360+2% of 31360=3136+313.6*2=3136+627.2 = 3763.2.

So total interest is=3000+3360+3763.2 = 10123.2.

I hope this method understand. Goodluck.

1+12/100 = 112/100 = 28/25.
(28/25)^3 = 1.40,
25000 * 1.40.

Please explain how 28/25 came?

Rate interest 12 for 3 year.

1st 2 year =a+b+(a*b/100)=12+12+(12*12/100)=25.44%.
3rd year = 25.44+12+(12*25.55/100)=40.49%.

Then substitute the r value in simple interest for 1 year then you can get answer directly.

Hi friends, don't use any formulas for calculating compound interest.

Here I show a simple way for all.

Lets the principal amount be 25,000 rs here and time=3 years, rate of interest=12%. Firstly calculate the interest for 1 year==>25000*(12/100)=3000rs,

So if we want to find the compound interest in second year firstly just add the interest amount to the principal amount==>25000+3000=28000rs.

Then compound interest in 2 years=28000*(12/100)=3360rs,this is the compounded interest in 2 years..then now we just add the previous principal and interest calculated now..28000+3360=31360rs this is the principal amount now.. compounded interest in 3rd year=31360*(12/100)=3763.2rs.

So compounded interest for this amount and rate of interest after 3 years=3000+3360+3763.2=10123.20rs.

Does this concept of compound interest is understandable are not?

What will be the rate of compound interest if a man invests Rs. 1, 01, 490 and get Rs. 2, 03, 500 after 10 years?

Can anyone answer it?

Please give me a shortcut methods for competitive exams.