SSC MTS Compound Interest — Study Material, 12 PYQs & Practice MCQs | ZestExam
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SSC MTS Compound Interest
Study Material — 12 PYQs (2019–2019) · Concept Notes · Shortcuts
SSC MTS Compound Interest is a frequently tested subtopic — 12 previous year questions from 2019–2019 papers are included below with concept notes, key rules and shortcut tricks.
The difference between compound interest and simple interest on ₹10,000 for 2 years at 5% per annum is:
Exam Q 42019Previous Year Pattern
₹6,000 is invested at 15% per annum compound interest for 1 year, compounded half-yearly. What is the amount at the end of the year?
Exam Q 52019Previous 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 62019Previous Year Pattern
At what rate per annum will ₹5,000 become ₹6,050 in 2 years at compound interest?
Exam Q 72019Previous Year Pattern
A principal of ₹8,000 is invested at 10% p.a. compound interest. After how many years will the amount become ₹10,648?
Exam Q 82019Previous Year Pattern
A certain sum becomes ₹1,44,000 in 2 years and ₹1,72,800 in 3 years at compound interest. What is the rate of interest per annum?
Exam Q 92019Previous Year Pattern
A sum of money becomes ₹9,680 after 2 years and ₹10,648 after 3 years when invested at compound interest. Find the principal and rate of interest per annum.
Exam Q 102019Previous Year Pattern
A principal amount doubles itself in 5 years at compound interest. In how many years will it become 8 times itself at the same rate?
Exam Q 112019Previous Year Pattern
A sum of ₹12,000 is invested at 20% p.a. compound interest, compounded half-yearly. What will be the amount after 1.5 years? (Assume the interest is compounded at the end of each half-year.)
Exam Q 122019Previous Year Pattern
The difference between compound interest and simple interest on a sum for 2 years at 8% p.a. is ₹128. Find 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'