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Tuesday, October 16, 2012

Shortcuts in solving aptitude-10

Interest is the ‘extra’ money paid by the borrower to the lender for using the money for a specified
period of time.
Principal (P) : - The money lent or borrowed is called the Principal.
Amount (A) : - The total money, i.e. Principal + Interest is called the amount.
Rate of interest (r) :- The rate at which interest is calculated on the Principal is called the rate of interest.
Interest is of two kinds
1.    Simple interest (I)
If the interest is calculated for every time period (generally calculated yearly, half-yearly, quarter-yearly) only on the original sum (Principal) borrowed, then such interest is called as the simple interest.
The interest is same for each qf the time-periods.
i.e. if the interest for one time-period (if taken as a year) is I, then the interest for ‘n’ time-periods(years) is ‘nI’ 
2.    Compound interest
In this method, at the end of each time period, the interest is added to the principal, and this amount becomes the new Principal for/the next time period. The amount at the end of the second time period becomes the Principal for the third time period and so on.
The interest is not same for all the time-periods, but the interest for any time period is greater than the interest for the preceeding time-period. Compound interest (CI) = Final amount  -  initial principal

To Exercise some more problems on SI and CI visit here


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