Simple interest and compound interest problems pdf

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simple interest and compound interest problems pdf

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Compound Interest : Aptitude Test (65 Questions with Explanation)

Interest rates are very powerful and intriguing mathematical concepts. Our banking and finance sector revolves around these interest rates.

One minor change in these rates could have tremendous and astonishing impacts over the economy. But why? Before determining the reason of this why? Interest is the amount charged by the lender from the borrower on the principal loan sum. It is basically the cost of renting money. And, the rate at which interest is charged on the principal sum is known as the interest rate. The rate at which interest is charged depends on two factors.

The above two reason becomes the basis of why interest rates are so important and have a great effect on markets and economy. Since a minor rise in interest rates increases the cost of borrowing for the borrower and as a result, he has to pay more interest on his loan amount and thus, a decline in his money income that he could spend on other products which create a ripple effect of decreased spending throughout the economy and vice versa.

Since change in interest rate has a chain effect in the market, it has a great deal of importance in the study of market, finance, and economy. But, a relatively simpler level of questions is asked in the CAT based on the concepts learned at the time of high school. Simple interest is that type of interest which once credited does not earn interest on itself. It remains fixed over time. So, if P amount is borrowed at the rate of interest R for T years then the amount to be repaid to the lender will be.

Let x be his capital or principal. At the completion of each scheme, he gets the same interest. What is the ratio of his investment? This the most usual type of interest that is used in the banking system and economics.

In this kind of interest along with one principal further earns interest on it after the completion of 1-time period. Then after n years the deposit or loan will accumulate to:. Find the amount at the end of third year. After 20 years, it will become? Then, the value of each installment is given by. If the flat is purchased under installment plan, find the value of each installment. Let x be the amount of installment. The above examples are just few types based on compound interest, there could be numerous others complex and difficult questions that could come in the CAT exam.

It has vast and diverse application. In exam you could also find problems that involve both simple and compound interest. You will get thorough and fluent in this topic with time and practice. Consider a new sequence of five consecutive even numbers ending with 2a3. Enroll Now Rs. The basics of both type of Interests is explained very neatly with examples for better understanding.

Thank you. Your email address will not be published. This site uses Akismet to reduce spam. Learn how your comment data is processed. It changes with time. The reason behind this the inflation or price rise. And, if there is less chance of payment failure on the part of borrower then the rate of interest would be lower. If you Like this post then share it! Sowmya says:. October 27, at pm. Leave a Reply Cancel reply Your email address will not be published. Got a discount code?

Close Proceed. Close Pay. The rate at which a sum becomes 4 times of itself in 15 years at S.

Simple Interest and Compound Interest Problems for Bank Exams

Note: Due to some limitations in web options, Math symbols, notations were unable to view properly. In our eBook all Math symbols, notations will be in order. I for 3 — years C. Practice Simple and Compound Interest Problems. What is the rate of interest on that amount?

In worksheet on compound interest we will solve different types of questions where compound interest is calculated annually, where compound interest is calculated half-yearly and where compound interest is calculated quarterly by using formulas. She lent it to Andy at the same rate but compounded annually. Find her gain after 2 years. What amount will he get on maturity? Find the compound interest he gets. What amount will he have to pay after 3 years to clear the debt? R Finance to purchase a TV set.

Worksheet on Compound Interest

If the interest received from Scheme B was Rs. Find the principal. What would be the compound interest accrued on the same amount at the same rate in the same period?

Simple interest and Compound interest problems and solutions pdf

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Interest rates are very powerful and intriguing mathematical concepts. Our banking and finance sector revolves around these interest rates. One minor change in these rates could have tremendous and astonishing impacts over the economy. But why?

What would be the compound interest accrued on an amount of Rs. Certain loan amount was repaid in two annual installments of Rs. W of Rs. If the interest received is Rs. A person receives a sum of Rs. Find the amount invested at the beginning.

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics. Compound interest is contrasted with simple interest , where previously accumulated interest is not added to the principal amount of the current period, so there is no compounding. The simple annual interest rate is the interest amount per period, multiplied by the number of periods per year. The simple annual interest rate is also known as the nominal interest rate not to be confused with the interest rate not adjusted for inflation , which goes by the same name. The compounding frequency is the number of times per year or rarely, another unit of time the accumulated interest is paid out, or capitalized credited to the account , on a regular basis.


Here we given Simple & Compound Interest Notes Pdf for those who are preparing for Competitive Examination.


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