Study Material — 10 PYQs (2019–2019) · Concept Notes · Shortcuts
SBI PO Compound Interest is a frequently tested subtopic — 10 previous year questions from 2019–2019 papers are included below with concept notes, key rules and shortcut tricks.
10 questions from actual SBI PO papers · all shown free · click option to reveal solution
Exam Q 12019Previous Year Pattern
A principal amount becomes ₹19,360 after 2 years at 10% per annum compound interest. What was the original principal?
Exam Q 22019Previous Year Pattern
Priya deposits ₹5,000 in a bank offering 8% per annum compound interest, compounded half-yearly. What will be the amount after 1 year?
Exam Q 32019Previous Year Pattern
At what rate per annum will ₹10,000 become ₹12,100 in 2 years at compound interest?
Exam Q 42019Previous Year Pattern
A sum of money doubles itself in 5 years at compound interest. In how many years will it become 8 times at the same rate?
Exam Q 52019Previous Year Pattern
Rahul invests ₹8,000 at 15% per annum compound interest, compounded annually. What is the compound interest earned in 2 years?
Exam Q 62019Previous Year Pattern
A person invests ₹P at compound interest compounded annually. The amount becomes ₹4P after 3 years. At the same rate, in how many years will ₹P become ₹16P?
Exam Q 72019Previous Year Pattern
A sum of money doubles itself in 5 years at compound interest. In how many years will it become 8 times itself at the same rate?
Exam Q 82019Previous Year Pattern
A principal of ₹5,000 is invested at 20% per annum compound interest compounded half-yearly. What is the amount after 1.5 years?
Exam Q 92019Previous Year Pattern
A sum of ₹10,000 is invested at compound interest. The amount becomes ₹12,100 after 2 years. If the same sum is invested at the same rate for 4 years, what will be the amount?
Exam Q 102019Previous Year Pattern
A principal amount is invested at 10% per annum compound interest. If the difference between the compound interest earned in the 3rd year and the 2nd year is ₹121, what is the principal?
Concept Notes
Compound Interest— Rules & Concept
Core ConceptRead this first — the foundation of the topic
Compound Interest (CI) is the interest calculated on both the principal amount and the accumulated interest from previous periods. Unlike simple interest, compound interest grows exponentially because interest earns interest. This concept is fundamental in banking, investments, and loan calculations. Core Concept: When you deposit money in a bank, the bank pays you interest. In the second year, you earn interest not just on your original money, but also on the interest earned in the first year. This is compounding effect.
Key RulesCore rules you must know cold
1
Interest is added to principal at regular intervals (annually, half-yearly, quarterly)
2
Each period's interest is calculated on the new principal (original + accumulated interest)
3
The frequency of compounding affects the final amount
4
More frequent compounding means higher returns
Formula BlockMemorise — at least one formula appears in every paper
Amount = P(1 + R/100)^T
Compound Interest = Amount - Principal
Where P = Principal, R = Rate per annum, T = Time in years
For different compounding periods:
- Half-yearly: A = P(1 + R/200)^(2T)
- Quarterly: A = P(1 + R/400)^(4T)
- When rates differ: A = P(1 + R1/100)(1 + R2/100)(1 + R3/100)...
Exam PatternsWhat examiners ask — read before attempting PYQs
SSC CGL consistently asks 2-3 questions on compound interest. Common question types include finding amount after given years, comparing CI and SI, population growth problems, and depreciation calculations. Questions often involve 2-3 years timeframe with rates between 10-25%.
Powerful Shortcut for CI-SI Difference:
For 2 years: CI - SI = P(R/100)²
For 3 years: CI - SI = P(R/100)² × (300 + R)/100
Worked ExampleSolve this step-by-step before moving on
1
Step 1
Identify values - P = 8000, R = 15%, T = 2 years
2
Step 2
Apply formula - A = P(1 + R/100)^T
3
Step 3
A = 8000(1 + 15/100)²
4
Step 4
A = 8000(1.15)²
5
Step 5
A = 8000 × 1.3225 = Rs. 10,580
6
Step 6
CI = Amount - Principal = 10,580 - 8000 = Rs. 2,580
Worked Example 2:
A sum becomes Rs. 13,230 in 2 years and Rs. 15,214.50 in 3 years at compound interest. Find the principal and rate.
ShortcutsUse these to save 30–60 seconds per question
When amount after n years and (n+1) years are given, rate = [(Amount after (n+1) years / Amount after n years) - 1] × 100
Most
Exam TrapsCommon mistakes students make — avoid these
Students frequently confuse the compounding frequency. When interest is compounded half-yearly, they forget to double the time period and halve the rate. Always remember: half-yearly means R/2 and 2T, quarterly means R/4 and 4T.
This single error costs marks in 40% of compound interest questions.
Another critical error is using simple interest formula for compound interest calculations, especially in word problems involving population growth or depreciation where the compounding effect is implicit.
Key Points to Remember
Amount formula: A = P(1 + R/100)^T where compound interest = A - P
For half-yearly compounding: A = P(1 + R/200)^(2T)
CI - SI for 2 years = P(R/100)² (most important shortcut formula)
CI - SI for 3 years = P(R/100)² × (300 + R)/100
When different rates apply: multiply (1 + R1/100)(1 + R2/100) for each year
Population growth and depreciation problems use compound interest concepts
More frequent compounding (quarterly vs annually) gives higher returns
If amount doubles in n years, it becomes 4 times in 2n years due to compounding
Rate finding trick: R = [(A₂/A₁) - 1] × 100 when consecutive year amounts given
Always convert compounding period: half-yearly means R/2 and time × 2
Exam-Specific Tips
Half-yearly compounding uses rate R/2 and time 2T in the formula
Quarterly compounding uses rate R/4 and time 4T in the formula
CI - SI difference for 2 years = P(R/100)²
CI - SI difference for 3 years = P(R/100)² × (300 + R)/100
When principal doubles, the time period is called 'doubling period'