Ramesh has borrowed an amount of Rs. 2,00,000 from a bank to start a business. How much simple interest will he pay at acrate of 11% per annum after 2 years?
- AOption (a)
Rs. 44,000
- BOption (b)
Rs. 44,600
- COption (c)
Rs. 46,000
- DOption (d)
Rs. 45,500
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Correct answer
Rs. 44,000
Why this answer is correct
Shortcut Trick
Net Interest Percentage = Rate × Time = 11% × 2 = 22%.
Simple Interest = 22% of ₹2,00,000.
⇒ 22 × 2000 = ₹44,000.
∴ The correct answer is ₹44,000.
Alternate Method
Given:
Principal (P) = ₹2,00,000
Rate of Interest (R) = 11% per annum
Time Period (T) = 2 years
Formula Used:
Simple Interest (SI) = (P × R × T) ÷ 100
Calculations:
⇒ SI = (2,00,000 × 11 × 2) ÷ 100
⇒ SI = 2,000 × 11 × 2
⇒ SI = 2,000 × 22
⇒ SI = ₹44,000
∴ The correct answer is ₹44,000.
Additional Information
Total Amount Formula
The total amount (A) to be paid back is the sum of Principal and Simple Interest: A = P + SI.
Nature of Simple Interest
Simple Interest remains constant for every year if the Principal and Rate are unchanged, unlike Compound Interest which increases annually.
SI vs CI Difference for 2 Years
The difference between Compound Interest and Simple Interest for 2 years is given by the formula: Difference = P × (R/100)2.
