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 ] 2n
- Type 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.