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SIMPLE
INTEREST
INTEREST

AND

COMPOUND

NOTATIONS:
P Principal, A = Amount, I = Interest, T = Time, R = Rate of interest per
annum.
FORMULAE:
1. A = P + I
PTR
2. I
100

100I
PR
100I
4. P
RT
100I
5. R
PT
3. T

COMPOUND INTEREST
Nomenclature:

A Amount (Compounded)
P Principal
R Rate of interest per annum
N Number of years or Number of periods
C.I Compound Interest

Formulae:
R

A P 1

100

= Compounded Amount

CI = A P
PROBLEMS:
1. The difference between the SI and CI on a sum of money at 4% per annum for 2
yrs is 45. Find the sum.
Method 1:
100

Reqd. Sum = D

Where D is the difference between S.I. and C.I. and R = Rate Percent
D = 45 rupees
R = 4%
100

Sum = 45

28125 rupees.

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Note: When d is the difference between the CI and the SI in 3 years and R is the
rate percent, then the sum invested is given by

Sum

d(100)3
R 2(300 R)

2. If the compound interest on a certain sum for 2 years at 5% p.a. is 92 rupees.

What would be the simple interest at the same rate for 2 years?
Method:

SI

SI

2 CI
R
2
100

(formula)

2 92
184

89.75
5
2.05
2
100

3. A man took a loan of Rs.5000, which is to be paid in three equal yearly

installments. If the rate of interest is 10% per annum CI. Find the value of each
installment.
Method:
Principal
Formula: Value of each installment =

100
100

100 R 100 R

100

100 R

Where R is the rate percent

P = 5000 rupees
R = 10%
Let x be the value of each installment

5000

5000

5000 11
55000 121

2010.57
10 100
10(121 110 100)

10 1

11 121

100 100
10 10
100
10

110 110
11 11
110
11
4. What rate of C.I for a sum of Rs.6000 will amount to Rs.6720 in 2 years if the
interest is calculated every year?
Method:

Formula:

Rate% =

A
P

1
N

1 100

Where P = Principal; A = Amount; N = Period or no. of years.

Rate% =

6720
6000

1
2

1 100 5.83 %

5. A sum of money is doubled in 3 years at C.I. compounded annually. In how many

years will it become 4 times?
Method:
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(Formula)

Time =

T = 3; a = 2; b = 4

Time =

Tlogb
loga

Where T = Time, No. of years

a = Doubled or 2 times
b = 4 times

3 log 4
6 years.
log 2

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