Aptitude - Compound Interest - Discussion

@Snehal and @Sujata.

p.c.p.a means per capital per annum.

Good method @Selva. Thanks for posting it.

Can anyone explain it in short method?

How comes 28/25 * 28/25 * 28/25?

A sum of money lent at compound interest amount to Rs. 1210 in two years and to rupees 1464.10 in 4 years find the rate of interest.

Why we are not taking minus 1 in the formula for compound interest?

Please explain how come 28/25?

Dear sir/madam,

Please calculate the compound interest on rs 25000 for first 2 years @15% and @16%for 3rd year.

Here I got a method of solving compound interest for two years and three years.

You just need to know SQUARES and CUBES to solve them in mind, without any pen and paper.

I suppose if we know rate of interest collectively for two years or three years, it would be easy to find the interest.

So here is d simple trick to find rate of interest 2 years:

If rate of interest is given.

10% ==> 10+10+1^2 = 21.

So 21 is the rate of interest for two years collectively. @10pcpa interest.

20% ==> 20+20+2^2 = 44.
30% ==> 30+30+3^2 = 69.
12% ==> 12+12+1. 2^2= 25. 44.

Hope it's understandable.

Now for 3 years:

10% ==> 10+10+10+1^2+1^2+1^2+1^3/10.

==>30+1+1+1+1/10.
==>33+0.1=33.1.

So, @10% per annum the compounded interest for three years it will b 33.1%.

If it's 5% per annum then,

5% ==> 5+5+5+0.5^2+0.5^2+0. 5^2+0.5^3/10.

==>15+0.25+0.25+0.25+0.125/10.
==> 15.75+0.0125 = 15.7625%.

I hope it's helpful n understandable.

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).