What sum (in ₹) will earn a simple interest of ₹1,320 in 4 years at 8% per year rate of interest?
- AOption (a)
2,062.5
- BOption (b)
4,125
- COption (c)
422.4
- DOption (d)
8,250
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Correct answer
4,125
Why this answer is correct
Shortcut Trick
Total percentage interest = Rate × Time = 8% × 4 = 32%.
According to the question, 32% of the Principal = ₹1,320.
1% of the Principal = 1320 ÷ 32 = 41.25.
100% (Original Sum) = 41.25 × 100 = ₹4,125.
∴ The correct answer is ₹4,125.
Alternate Method
Given:
Simple Interest (SI) = ₹1,320
Rate of Interest (R) = 8% per annum
Time (T) = 4 years
Formula Used:
Principal (P) = (Simple Interest × 100) ÷ (Rate × Time)
Calculations:
⇒ P = (1320 × 100) ÷ (8 × 4)
⇒ P = 132000 ÷ 32
⇒ P = 4125
∴ The correct answer is ₹4,125.
Additional Information
Amount in Simple Interest
The total Amount (A) is the sum of the Principal and the Simple Interest: A = P + SI.
Compound Interest (CI)
Unlike Simple Interest, Compound Interest is calculated on the Principal plus the interest accumulated over previous periods: A = P(1 + r/100)n.
Difference between SI and CI
For a period of 1 year at the same rate, Simple Interest and Compound Interest are always equal, provided the interest is compounded annually.
Rule of 72
A quick way to estimate how long it takes to double your money with Compound Interest: Time ≈ 72 ÷ Interest Rate.