At a simple interest rate of 8% per annum, how much amount (in ₹ units) will be the simple interest amount of ₹700 in 2 years?
- ((a))
3875
- ((b))
4575
- ((c))
4375
- ((d))
4775
Show Answer
4375

Shortcut Trick
Calculate the Effective Interest Rate: 8% × 2 years = 16%.
Since 16% of the Principal equals the Simple Interest (₹700):
Principal = (700 ÷ 16) × 100
Principal = 43.75 × 100 = 4375.
∴ The correct answer is ₹4375.

Alternate Method
Given values from the problem:
⇒ Simple Interest (SI) = ₹700
⇒ Rate of Interest (R) = 8% per annum
⇒ Time Period (T) = 2 years

Formula used for Simple Interest:
⇒ SI = (P × R × T) / 100
Substitute the given values to find the Principal (P):
⇒ 700 = (P × 8 × 2) / 100
⇒ 700 = (P × 16) / 100
⇒ P × 16 = 700 × 100
⇒ P = 70000 / 16
⇒ P = 4375
∴ The correct answer is ₹4375.

Additional Information
Total Amount in Simple Interest
The total amount (A) after T years is the sum of the Principal and the interest: A = P + SI = P(1 + RT/100).
Compound Interest (CI)
Interest is calculated on the principal and the accumulated interest: A = P(1 + r/100)n.
SI vs CI Difference
For a period of 2 years, the difference between Compound Interest and Simple Interest is given by: D = P(r/100)2.























































