: COMPOUND INTEREST AND ANNUITIES :

: (Compound Interest) :
* Interest are two types: (i) Simple interest (S.I) and (ii) Compound interest (C.I)
 Rule of Simple interest (S.I): S.I. = P.ⅈ.𝑡 or P.ⅈ.𝑛
𝑟
[Here, P = Principal value, ⅈ = 100 where ′𝑟′ = rate of interest, t or 𝑛 = time or year.]
 A = Amount = Principal + Interest (S.I or C.I)
 Rule of Compound interest (C.I):
(i) If interest is compounded yearly, then- A = P (1 + ⅈ )𝑛
ⅈ 2𝑛
(ii) If interest is compounded half-yearly, then- A = P (1 + 2)
ⅈ 4𝑛
(iii) If interest is compounded quarterly, then- A = P (1 + 4)
ⅈ 12𝑛
(iv) If interest is compounded monthly, then- A = P (1 + 12)
𝑟
[Here, A = Amount, P = Principal, 𝑟 = rate of interest, ⅈ = 100 , 𝑛 = no. of years, and C.I = A – P]
 Direct formula of C.I :
(i) If interest is compounded yearly, then- C.I. = 𝑷[(𝟏 + ⅈ)𝒏 − 𝟏]
ⅈ 𝟐𝒏
(ii) If interest is compounded half-yearly, then- C.I. = 𝑷 [(𝟏 + 𝟐) − 𝟏]
ⅈ 𝟒𝒏
(iii) If interest is compounded quarterly, then- C.I. = 𝑷 [(𝟏 + 𝟒) − 𝟏]
ⅈ 𝟏𝟐𝒏
(iv) If interest is compounded monthly, then- C.I. = 𝑷 [(𝟏 + 𝟏𝟐) − 𝟏]
 Sum = Principal value.
: Questions :
1. Calculate the compound interest on ₹ 7646 at 3% in 4 years. The interest being compounded
annually.
2. Calculate the C.I. on ₹ 1000 at 5% in 4 years, the interest being compounded annually.
3. Find the amount that ₹ 100 will become after 20 years at C.I. @ 5% calculate annually.
4. Calculate the difference between C.I. and S.I. on a sum of ₹ 3000 for 4 years at 9% p.a.,
compounded annually.
5. Find the C.I., the interest being compounded half-yearly on ₹ 6000 for 3 years at 6% p.a.
6. The difference between S.I. and C.I. on a certain sum for 2 years at 5% p.a. is ₹ 2.50. Find the sum.
7. The difference between S.I. and C.I. on a certain sum for 3 years at 5% p.a. is ₹ 228.75; find the
sum.
8. What sum of money invested at 5% per annum, payable half-yearly for 2 years will amount to ₹
1000?
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9. What sum of money will amount to ₹ 1000 in 12 years at 42% p.a. compound interest?
10. In what time will a sum of money double itself at 5% compound interest?
11. In what time will a sum of money treble itself at 5% compound interest?
[Given, log 3 = 0.4771213, log 1.05 = 0.0212]
12. In what time will a sum of money double itself at 10% compound interest, payable half-yearly?
[Given, log 2 = 0.3010, log 1.05 = 0.0212]
13. In how many years will ₹ 1000 become ₹ 2500 at 10% p.a. compound interest?
14. A bank offers to pay back ₹ 20000 after 10 years on a fixed deposit of ₹ 9000. What rate of interest
is it offering, if it pays half-yearly compound interest?
15. Purchasing of National Savings Certificate makes the investment double itself in 6 years. Find the
rate of interest accrued, if compounded half-yearly.
16. Find the rate percent per annum if ₹ 800 amount to ₹ 10000 in 20 years, interest being payable
quarterly.
 17. What sum at C.I. will amount to ₹ 650 at the end of the first year and ₹ 676 at the end of the
second year?
18. A sum of money invested at C.I. amounts to ₹ 11236 and ₹ 11910.16 at the end of second and third
year respectively. Find the rate of interest and the sum.
19. A sum of money invested at compound interest amounts to ₹ 10816 at the end of the second year
and to ₹ 11248.64 at the end of the third year; find the rate of interest and the sum investment.
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20. A man deposits ₹ 5000 in a savings bank which pays compound interest at the rate of 4 2% for first
two years and then at the rate of 5% for next three years. Find his amount after five years.
21. If the population of a town increases every year by 1.5% of the population at the beginning of that
year, in how many years will the total increase of population be 40% ?
22. A loan earns interest at a certain rate (compound) per cent per annum. Four years ago the amount
was ₹ 81; now it is ₹ 144. What will the amount be two years hence?
23. S. Sen borrowed ₹ 6000 from a money-lender but he could not pay any amount in a period of 4
years. Accordingly the money-lender demanded now ₹ 7500 from him. What rate per cent per
annum compound interest did the latter require for lending his money?

: Answers :
[1] ₹956 or ₹959.64 [2] ₹215 or ₹215.51 [3] ₹165.5 or ₹165.33 [4] ₹154 or ₹154.74 [5] ₹1161 or ₹1164.31
[6] ₹1000 [7] ₹30000 [8] ₹906.1 or ₹905.79 [9] ₹ 589.9 or ₹589.62 [10] 14.2 years [11] 22.5 years
[12] 7.1 years [13] 9.6 years [14] 8.2% [15] 11.8% [16] 12.8% [17] ₹ 625 [18] 6% and ₹10000
[19] 4% and ₹10000 [20] ₹6321 [21] 22.8 years [22] ₹191.3 or ₹192.23 [23] 5.7%

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