7 questions from actual IBPS RRB PO papers · all shown free · click option to reveal solution
When you deposit money in a bank, the bank usually adds interest once a year. But some banks add interest twice a year (half-yearly) or four times a year (quarterly). Each time interest is added, it becomes part of the new principal, and the next interest is calculated on this larger amount. This is why more frequent compounding gives you more interest
For half-yearly CI: The rate is divided by 2, and time is multiplied by 2. For quarterly CI: The rate is divided by 4, and time is multiplied by 4
A = P × (1 + R/(100×n))^(t×n) Where: - A = Amount after interest - P = Principal (original money) - R = Annual rate of interest (%) - n = Number of times compounded per year (2 for half-yearly, 4 for quarterly) - t = Time in years - CI = A − P
SSC CGL typically asks: Compare CI for different compounding periods, find CI amount, or calculate effective rate. Shortcut/Trick: For half-yearly: Use R/2 and 2t. For quarterly: Use R/4 and 4t. Always remember the rate gets divided and time gets multiplied by the same number.
Identify n = 4 (quarterly)
Apply formula: A = 8000 × (1 + 20/(100×4))^(1×4)
A = 8000 × (1 + 5/100)^4
A = 8000 × (1.05)^4
A = 8000 × 1.2155 = 9724
CI = 9724 − 8000 = Rs 1724
Students forget to divide the rate by the compounding frequency. They use the full annual rate instead of R/2 or R/4, leading to wrong answers. Always reduce the rate first.
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