Simple and Compound Interest — CDS Elementary Mathematics

Formulas (1)

• SI = PRT/100 · Simple interest
  $$\text{SI} = \dfrac{PRT}{100}$$

Watch out for (1)

• Triples means twice the sum in interest
  → SI = PRT/100

Formulas (2)

• The amount formula and compounding periods · Compound amount
  $$A = P\left(1 + \dfrac{r}{100}\right)^n$$
• Doubling times and growth factors · Growth condition
  $$\left(1 + \dfrac{r}{100}\right)^n > k$$

Watch out for (2)

• Adjust both the rate and the periods
  → The amount formula and compounding periods
• Four times is two doublings, not four
  → Doubling times and growth factors

Formulas (2)

• The gap between CI and SI · Two-year gap
  $$\text{CI} - \text{SI} = P\left(\dfrac{r}{100}\right)^2$$
• Equal instalments · Two instalments
  $$\dfrac{X}{1 + r} + \dfrac{X}{(1 + r)^2} = P$$

Watch out for (2)

• The two-year formula is for two years only
  → The gap between CI and SI
• Discount each payment separately
  → Equal instalments