Quantitative Aptitude: Compound Interest
Compound Interest
Money is said to be lent at compound interest if the interest is not paid as soon as it falls due but is added to the principal after a fixed period, so that the amounts at the end of the period becomes the principal for the next period.
Compound Interest Terms
P = Principal.
R = Rate of interest (%).
T = Time.
Compound Interest Formulas
Amount = Principal + Interest.
Compound interest = Amount - P
Formula: To calculate Compound Interest Annually
| Amount for compound interest | = | P |  |
1 + | R |  |
T | 100 |
| Compound interest | = | P |  |
|
1 + | R | |
T | - 1 |  |
100 |
Formula: Compound Interest is Payable Half-Yearly
| Amount | = | P | |
1 + | ( R / 2 ) | |
2T | 100 |
Formula: Compound Interest is Payable Quarterly
| Amount | = | P | |
1 + | ( R / 4 ) | |
4T | 100 |
Formula: Compound Interest is Payable Annually but time is in Fraction
| Let, Time | = | 5 | 2 | years. | 3 |
| Amount | = | P | |
1 + | R | |
5 | X | |
1 + | (2/3) R | |
100 | 100 |
Formula: If Compound Interest rates for Successive Years are Different
Let, r1, r2, r3...are the rates for successive years.
| Amount | = | P | |
1 + | r1 | |
X | |
1 + | r2 | |
X | |
1 + | r3 | |
100 | 100 | 100 |
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