Maths Shortcuts & Mind Tricks to Solve Problems Related to Compound Interest

Hello Friends, Today we are going to explain you a shortcut method on a question related to Compound Interest. As in the Exam Hall, our every second is very important & if we solve the questions smartly we can increase our number of attempts easily. So that’s why it is very important to learn the shortcut methods so that we can attempt maximum questions in minimum time. But only learning them will not give you any benefit until you not do practice. Only by doing Practice daily you can improve your speed & accuracy. Hope this article will be helpful to you. Thank You Friends. Happy Learning !! J

Q) Find the compound interest occurred on a principle of amount of Rs. 14,000 at the interest rate of 2% per annum for the period of 2 years?

Solution:

We have given:

Principle (P) = Rs. 14,000

Rate of interest (R) = 2%

Time Period (T) = 2 years.

First we solve the above Problem by using Normal Method:

As we know,

Amount = P × [1 + (R /100)]^T

Compound Interest = Amount – Principle

By Substituting the given values in the above formula, we get

Amount = 14,000 × [(1 + (2/100)]2

= 14,000 × [(100+2)/100]2

 =14,000 × (1.02)2

= 14,000 × 1.0404

= Rs 14565.6

Now As,

Compound Interest = Amount – Principle

= 14565.6– 14,000

= 565.6

Therefore, Rs 565.6 is the required Compound Interest that we get after two years.

As we can see the above method includes lot of calculation, therefore if we use this method it will take more than one minute to find out the required answer & as we can’t afford so much time to only one question, so we will solve this question by using the below shortcut method.

Shortcut Method:

Step 1: As we have Given the Interest Rate = 2%

Therefore First Find 2% of 14,000

1%= Shift Two Decimal to the Left Side

1% = 140

Therefore, 2% = 140 × 2

= Rs 280

This is for First year,

For 2 years, it will be, 280 × 2 = Rs 560

Step-2: Now Divide the given Interest Rate by 2.

i.e (2/2)%

= 1%

Now, find 1% of Rs 560 (Use the Concept of Percentage Here)

1%= 5.60

Now, Step 1 + Step 2:

= Rs 560+ 5.60

= Rs 565.6

Therefore, Rs 565.6 will be the required answer.

Note: This shortcut method is applicable to find the compound interest when we have the time period equal to 2 years only.

Now Take Some More Example:

Q) Find the compound interest occurred on a principle of amount of Rs. 8,000 at the Interest rate of  3% per annum for the period of 2 years?

Solution:

Step 1: Find 3% of Rs 8000

1% =80

3% = 80*3

=240

This is for First year,

Therefore for two years it will be 240 × 2 = Rs 480.

Step-2: Divide the given Interest Rate by 2.

i.e (R/2)%

= (3/2) %

= 1.5%

Now, find 1.5% of Rs 480

As, 1%=4.8

Therefore,

 0.5% = (1%/2) [Half of 1%]

=2.4

Therefore, 1.5% = (4.8+2.4)

= 7.2

Step3=Step 1 + Step 2

          = Rs(480 + 7.2)

= Rs 487.2

Therefore Rs 487.2 is the required Answer.

Q) Find the compound interest occurred on a principle of amount of Rs. 15,000 at the interest Rate of  5% per annum after the period of 2 years?

Solution:

Step 1: 5% of Rs 15,000

10%= Shift One Decimal to the left

     10%=1500

 Therefore, 5%=10%/2

=1500/2

=750

For Two Years, It will be 750 × 2 = 1500.

Step-2: Divide the given rate of interest by 2.

i.e (R/2)%= (5/2)%

= 2.5%.

Now, find 2.5%of Rs 1500

As we Know, 2.5%=1%+1%+0.5%

Therefore, We get

2.5% = 15+15+7.5

= 37.5

Step 3: Step 1 + Step 2:

= Rs (1500 + 37.5)

= Rs 1537.5

Therefore Rs 1537.5 is the required Answer.