# Tips Tricks And Shortcuts on Compound Interest And Simple Interest Problems

## Tips and Tricks to Crack CI and SI Problems

• Compound Interest is always calculated on the Amount (Principal + Interest)
• Simple interest is always calculated on Principal
• If a sum of money P amounts to A1 in n time at SI and the same sum of money amounts to A2 in 2n time at CI, it can be calculate as P/A1 = A/A2
• A sum at a rate of interest compounded yearly becomes Rs. A1in n years and Rs. A2 in (t + 1) years, then P = A1(A1/A2)t
• Difference between CI and SI for 2 years = pr2/1002
• Difference between CI and SI for 3 years = Pr2/1002 [(300+r)/100]
• If a sum A becomes B in t1 years at CI. Then After t2 years,
• Sum = (B)t2 / t1 /(A)(t2 / t1)-1. ## Type 1: Simple and Compound Interest Tips and Tricks and Shortcuts. Solve Difference between CI and SI

### Question 1.

Find out the difference between Compound Interest and Simple interest for the sum of 10000 over 2 years period. If CI and SI is calculated at 20% and 23% p.a. respectively.

Options:

1. 200
2. 400
3. 100
4. 2000

#### Solution:

RSI for 2 years = 23 + 23 = 46%

RCI for two years = 20 + 20 + (20*20)/100 = 44%

Difference between CI and SI = 46 – 42 = 4%

Let the principal amount = 100%

Then 4% will be

(4 * 10000)/100

40000/100 = 400

## Type 2: Find the amount/time/rate of interest when CI or SI or their difference is given.

### Question 2.

The difference between the compound and simple interest on a certain sum at 12% p.a. for 2 years is Rs. 90. What will be the value of the amount at the end of 3 years if compounded annually?

Options:

1. Rs. 8890.80
2. Rs. 8870.80
3. Rs. 8780.80
4. Rs. 8780

#### Solution:

Difference between CI and SI =  pr2/1002

90 = p122/1002

P = 90*1002/122

P = (90*10000)/144

P = 6250

Now, calculate the compound interest on Rs. 6250

A = 6250 (1 + 12/100)3

A = Rs. 8780.80