Compound Interest (Short-cut method)

Short-cut method:-
    In this method of calculating compound interest we have a formula which was derived in hope of making quicker calculations.

  Advantages of this method:-

1) It makes calculations quicker.
2) It is used in modern days.

  Disadvantages of this method:-

1) It is tougher when compared to Long Method.
2) It is very confusing and takes a long time to get digested.

How it is done?  

Formula:-

                                  

1) Amount = Principal( 1 + Rate )ⁿ

                                                                                          100

n is time period 

2) C.I = P[(1 +  R  )ⁿ  - 1]

                         100

Example Problems:- 

1)  Calculate the Amount & Interest on Rs.40000 at rate 5% for 3 years.

A) P = Rs. 40000

     R = 5%

     T = 3 years

   A = 40000 (1 +  5   ) ³

                           100

      = 40000 (  100 + 5  ) ³

                             100

      = 40000 ( 105 ) ( 105 ) ( 105 ) 

                       100     100      100

      = Rs. 46305

I = 46305 - 40000 = Rs. 6305

Note :- Its all about substituting right values is right formulas. 

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