Chapter 7 of 19
Revision Notes
Simple and Compound Interest — Revision Notes
CAT · Quantitative Aptitude
Free Simple and Compound Interest revision notes for CAT Quantitative Aptitude 2026 — key concepts, formulas, and definitions for quick revision.
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Key concepts, formulas, and definitions from Simple and Compound Interest for CAT Quantitative Aptitude preparation.
Key Topics to Revise
1
Basic Concepts and Terminology
- Interest is compensation for the time value of money - money today is worth more than money tomorrow
- Principal (P): The original amount of money borrowed or invested
- Rate (R): The percentage of interest charged per unit time (usually per annum)
2
Simple Interest Applications
- Simple Interest grows linearly - same amount added each year
- Forms an Arithmetic Progression: P, P+SI, P+2SI, P+3SI...
- If money doubles in 't' years at SI, rate = 100/t %
3
Compound Interest Fundamentals
- Interest is calculated on principal + accumulated interest
- Forms a Geometric Progression with ratio (1 + R/100)
- Amount grows exponentially, not linearly
4
Difference Between CI and SI
- For 1 year: CI = SI (no difference)
- For 2 years: CI - SI = P(R/100)²
- For 3 years: CI - SI = P(R/100)²(3 + R/100)
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Key Concepts
Money has different values at differentInterest calculated only on the originalInterest calculated on the principal plusPrincipal is the initial amount borrowedFor the same principal
Frequently Asked Questions
What topics are covered in Simple and Compound Interest for CAT?
Simple and Compound Interest is an important chapter in CAT Quantitative Aptitude. It covers key concepts and formulas that are frequently tested in the exam. Key topics include: Basic Concepts and Terminology, Simple Interest Applications, Compound Interest Fundamentals, Difference Between CI and SI.
How important is Simple and Compound Interest for CAT?
Simple and Compound Interest is a frequently tested chapter in CAT Quantitative Aptitude. Questions from this chapter appear regularly in previous year papers. There are 52 practice questions available for this chapter.
How to prepare Simple and Compound Interest for CAT?
Start by understanding the core concepts, then solve practice questions. Focus on formulas and their applications. Use revision notes for quick review before the exam.
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