The document discusses the concepts of simple interest and compound interest through examples and practice problems. It begins by defining key terms like principal, interest rate, and time period. It then provides examples to illustrate the calculation of simple interest and compound interest over multiple time periods. The document also discusses the differences between simple and compound interest formulas. It provides additional examples calculating interest compounded over various time intervals like yearly, half-yearly, and quarterly. The remainder of the document consists of practice problems related to simple and compound interest.

1. Bank Exams and SSC
Simple Interest and Compound Interest– Concept Session
Session for Banks and SSC
1

2. Basic terms involved
Principal (P)
Interest (I)
Rate of Interest (r) ---- usually expressed in per annum
Time(n) ------------------usually expressed in years, otherwise
converted to years to match r’s units.
Amount(A)

3. Year Simple Interest Compound Interest
P I A P I A
1st
2nd
3rd
P = Rs. 1000
r = 10% per annum
Year Simple Interest Compound Interest
P I A P I A
1st 1000 100 1100 1000 100 1100
2nd 1000 100 1200 1100 110 1210
3rd 1000 100 1300 1210 121 1331
3
Session for Banks and SSC
Difference between SI and CI explained

4. Difference between SI and CI for 2 years
P = Rs. 1000
r = 10% per annum
4
Year
Simple Interest Compound Interest
P I A P I A
1st 100 100
2nd 100 110
3rd 100 121
For 2 years = P (r/100)2
(also for second year)
For 3 years = P (r/100)2 (r/100 +3)
Session for Banks and SSC

5. Problems
The difference between the compound interest and the simple
interest accrued on an amount at the end of three years at the
rate of 12% is Rs. 381.888. What is the amount(in Rs.)?
1. 9500
2. 8400
3. 7200
4. 8000
5. None of these
Session for Banks and SSC
5
IBPS Clerk
(2011)
Answer: option 5
(8500)

6. Problems
The difference between compound interest compounded every 6
months and simple interest after 2 years is 248.10. The rate of
interest is 10 percent. Find the sum?
1. 14000
2. 18000
3. 12000
4. 16000
5. None of these
Session for Banks and SSC
6
IBPS PO Mains
(2016)
Answer: option 4

7. SIMPLE
Interest
COMPOUND
Interest
Interest
Amount
Simple Interest and Compound
Interest Formulas
8
SIMPLE
Interest
COMPOUND
Interest
Interest
𝑃𝑛𝑟
100
𝐴 − 𝑃
Amount 𝑃 + 𝑆𝐼 𝑃 1 +
𝑟
100
𝑛
Session for Banks and SSC
𝑃 = 𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙
𝑛 = 𝑡𝑖𝑚𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 𝑖𝑛 𝑦𝑒𝑎𝑟𝑠
𝑟 = 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚
𝐴 = 𝐴𝑚𝑜𝑢𝑛𝑡

8. Compounding n times a year – nominal and
effective rate of interest
Half yearly 𝑃 1 +
𝑟
2
100
𝑛×2
Quarterly 𝑃 1 +
𝑟
4
100
𝑛×4
Monthly 𝑃 1 +
𝑟
12
100
𝑛×12
9
Session for Banks and SSC

9. Problems
A person makes a fixed deposit of Rs 20000 in Bank of India
for 3 years. If the rate of interest be 13% SI per annum charged
half yearly. What amount will he get after 42 months?
1) 29100
2) 28100
3) 27100
4) 26100
5) 26500
Session for Banks and SSC
10
IBPS Clerk Prelims
(2016)
Answer: option 1

10. Problems
Rs 1000 is being charged @50% per annum. What is the interest
for 3rd year at compound interest?
1. 1125
2. 2375
3. 1150
4. 2520
5. None of these
Answer: Option 1
11
Session for Banks and SSC

11. Problems
Rs. 10000 is being compounded @ 20 % per annum. If the
interest is compounded half- yearly. What will be the amount
after 2 years?
1. 14641
2. 13310
3. 12100
4. 13450
5. None of these
12
Session for Banks and SSC
Answer: Option 1

12. After two years SI and CI on a sum are Rs. 400 and Rs.
440 respectively. What is the principal?
1. 1000
2. 500
3. 2000
4. 3500
5. None of these
13
Session for Banks and SSC
Answer: Option 1
Problems

13. A sum of money doubles in 10 years. How many years it will
take to become 4 times of itself at the same rate of simple
interest?
1. 20
2. 15
3. 30
4. 40
5. None of these
Answer: Option 3
14
Session for Banks and SSC
Problems

14. A sum of money doubles in three years when
compounded annually and it becomes x % of itself in 12
years. What is the value of x?
1. 12
2. 1600
3. 600
4. 720
5. None of these
Answer: Option 2
15
Session for Banks and SSC
Problems

15. Problems
Out of a sum of Rs. 750, a part was lent @5% SI and
the other @10% SI. If the interest on the first part after 2
years and interest on the second part after 4 years are
equal. What is the value of the second part?
1. 120
2. 100
3. 150
4. None of these
Answer: Option 3
16
Session for Banks and SSC

16. Problems
The population of a town increases by 5% every year. If the
present population is 9261, the population 3 years ago was
1) 5700
2) 6000
3) 7500
4) 8000
Session for Banks and SSC
17
SSC CGL
(2016)
Answer: option 4

17. Problems
I derive an annual income of Rs. 688.25 from Rs. 10000
invested partly at 8% per annum and partly at 5% per annum on
simple interest. How much of my money is invested at 5%?
(a) Rs. 3,725
(b) Rs. 3,625
(c) Rs. 4,800
(d) Rs. 5,000
(e) Rs. 5,500
Session for Banks and SSC
18
Answer: option a

18. Problems
If Rs. 5,000 becomes Rs. 5,700 in a year's time, what will Rs.
7,000 become at the end of 5 years at the same rate of simple
interest?
(a) Rs. 10,500
(b) Rs. 11,900
(c) Rs. 12,700
(d) Rs. 7,700
Session for Banks and SSC
19
Answer: option b
SSC CGL
(2012)

19. Problems
There is 100% increase to an amount in 8 years, at simple
interest. Find the compound interest of Rs. 8000 after 2 years at
the same rate of interest.
(a) Rs. 2500
(b) Rs. 2000
(c) Rs. 2250
(d) Rs. 2125
Session for Banks and SSC
20
Answer: option b
SSC CGL
(2013)