Simple and Compound Interest for Bank Exams
Simple & Compound Interest Mastery (Professional Level)
Simple and Compound Interest are core topics in bank exams. Questions are formula-based and can be solved quickly using shortcuts.
1. Simple Interest (SI)
SI = (P × R × T) / 100
- P = Principal
- R = Rate of Interest
- T = Time
Example: P = 1000, R = 10%, T = 2 years SI = 200
2. Compound Interest (CI)
Amount = P (1 + R/100)T
CI = Amount - Principal
Example: P = 1000, R = 10%, T = 2 Amount = 1000 × (1.1)² = 1210 CI = 210
3. Difference Between SI & CI
For 2 years:
Difference = P × (R/100)²
Example: P = 1000, R = 10% → Difference = 10
4. Shortcut Tricks
- Use direct formula for SI
- Memorize CI values for 2–3 years
- Use difference formula
- Avoid long multiplication
5. Formula Logic
CI grows exponentially because interest is added to principal every year.
Year 1 → P(1 + R/100)
Year 2 → P(1 + R/100)²
Speed Strategy
- Identify SI or CI quickly
- Use formula directly
- Memorize squares for CI
- Practice 2–3 year problems
Practice Questions
1. Find SI for P=2000, R=5%, T=2
2. Find CI for P=1000, R=10%, T=2
3. Difference between SI and CI?
4. Amount after 3 years at 10%?
Understanding Interest Improves Financial Awareness
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