Quantitative Aptitude Notes : Simple Interest & Compound Interest

Simple Interest & Compound Interest is one of the most important topics in quantitative aptitude section in various SSC and Banking exams. In this blog post, we will cover all the important aspects of this topic.

Simple Interest (SI)

The interest that is calculated uniformly on a sum of money is called simple interest (SI). Principal is the money borrowed or lent out for certain period is called the principal / sum. Interest is the extra money paid for using other money.

Usually, the following denotations are used:-

Principal = P

Rate of Interest = r % per annum (p.a.)

Time = t years

The, formula for Simple Interest is given by:-

Simple Interest (SI) = (P×r×t)) /100

Also, Amount (A) = SI + P.

Compound Interest

Here, interest is paid on both the original principal and on earned interest (unlike SI). In day-to-day life, compounded interest is more common. Thus, amount at the end of the 1st year will become the principal for the 2nd year and so on.

The formula for Compound Interest ( CI ) is given by:-

CI = [P (1+r/100) ^ n] – P

The more commonly used formula is:-

A = P (1+r/100) ^n

Miscellaneous Condition

When the rate of interest is different for each year during the period say : r1%, r2%, and r3%, then,

Amount = P x (1+r1/100) × (1+r2/100) × (1+r3/100).

Present worth of Rs. x due n years hence is given by:

Present Worth = x/(1+r/100)

Difference Between SI & CI Growth

Hope this helps.
All the best!

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Quantitative Aptitude Notes : Simple Interest & Compound Interest

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