What sum (in ₹) will earn a simple interest of ₹1,440 in 3 years at 8% per year rate of interest?
- AOption (a)
6,000
- BOption (b)
3,000
- COption (c)
12,000
- DOption (d)
345.6
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Correct answer
6,000
Why this answer is correct
Shortcut Trick
Calculate the effective interest rate for the given period: 8% × 3 years = 24%.
The total simple interest earned is 24% of the principal sum.
Given 24% = ₹1,440, then 1% = 1,440 ÷ 24 = ₹60.
The principal (100%) = 60 × 100 = ₹6,000.
∴ The correct answer is ₹6,000.
Alternate Method
Given:
Simple Interest (SI) = ₹1,440
Rate of Interest (R) = 8% per annum
Time (T) = 3 years
Formula Used:
Simple Interest (SI) = (P × R × T) ÷ 100
Calculations:
⇒ 1,440 = (P × 8 × 3) ÷ 100
⇒ 1,440 = 24P ÷ 100
⇒ 24P = 1,440 × 100
⇒ 24P = 144,000
⇒ P = 144,000 ÷ 24
⇒ P = 6,000
∴ The correct answer is ₹6,000.
Additional Information
Amount in Simple Interest
The total sum payable at the end of the period is called Amount (A). Formula: A = Principal (P) + Interest (SI) = P × (1 + RT/100).
Difference between SI and CI
For a period of 2 years, the difference between Compound Interest (CI) and Simple Interest (SI) is given by: D = P × (R/100)2.
Calculation of Rate or Time
Using the basic formula, we can derive: R = (SI × 100) ÷ (P × T) and T = (SI × 100) ÷ (P × R).