Simple & Compound Interest
Master money math with shortcuts.
Core Concepts
Interest calculations can be simplified using percentages and effective rates.
Simple Interest (SI)
SI = P × R% × T
Just multiply Rate and Time first!
5% for 3 years = 15% flat.
Compound Interest (CI) - 2 Years
Use Effective Rate:
R + R + (R×R)/100
For 10%: 10+10 + 100/100 = 21%.
Rule of 72
To find how long it takes to double your money:
Years = 72 / Rate
At 6%, it takes 72/6 = 12 years.
Solved Examples
Example 1: SI on 2000 at 5% for 4 years
Question: Find Interest.
• Total Rate % = 5 × 4 = 20%.
• 20% of 2000.
• 10% is 200, so 20% is 400.
• Answer: 400.
Example 2: CI on 1000 at 5% for 2 years
Question: Find Interest.
• Effective Rate = 5 + 5 + (25/100) = 10.25%.
• 10.25% of 1000.
• Shift decimal one place left for 10% -> 100.
• Actually, just multiply: 10.25 × 10 = 102.5.
• Answer: 102.5.
Example 3: Doubling at 8%
Question: How many years to double?
• Rule of 72.
• 72 / 8 = 9.
• Answer: 9 years.
