Previous Year TNPSC Maths Questions | Compound Interest Online Test

Compound Interest

• Sometimes it so happens that the borrower and the lender agree to fix up a certain unit of time, say yearly or half-yearly or quarterly to settle the previous account.
• In such cases, the amount after first unit of time becomes the principal for the second unit,the amount after second unit becomes the principal for the third unit and so on.
• After a specified period, the difference between the amount and the money borrowed is called the Compound Interest (abbreviated as C.I.) for that period.

IMPORTANT FACTS AND FORMULAE

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

1. When interest is compound Annually: \(Amount = P(1+\frac{R}{100})^n \)
2. When interest is compounded Half-yearly: \(Amount = P(1+ \frac{R/2}{100})^{2n} \)
3.  When interest is compounded Quarterly: \(Amount = P(1+ \frac{R/4}{100})^{4n} \)
4. When interest is compounded AnnuaI1y but time is in fraction, say 3(2/5) years. \(Amount = P(1+ \frac{R}{100})^{3} \times (1+ \frac{(2R/5)}{100}) \)
5. When Rates are different for different years, say Rl%, R2%, R3% for 1st,2nd and 3rd yearrespectively.Then, \(Amount = P(1+ \frac{R1}{100})(1+ \frac{R2}{100})(1+ \frac{R3}{100}) \)
6. Present worth of Rs.x due n years hence is given by : \(Present Worth = \frac{x}{1+(R/100)^n}\)