What sum of money (in ₹) will yield ₹700 as simple interest in 2 years at 10% per annum?
- AOption (a)
3000
- BOption (b)
3900
- COption (c)
3500
- DOption (d)
3700
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Correct answer
3500
Why this answer is correct
Shortcut Trick
The Effective Rate of Interest for 2 years at 10% per annum = 10% × 2 = 20%.
Given that 20% of the Principal (P) = ₹700.
To find the total Principal (100%), we multiply by 5.
⇒ P = 700 × 5 = 3500.
∴ The correct answer is ₹3500.
Alternate Method
Given:
Simple Interest (SI) = ₹700
Time (T) = 2 years
Rate of Interest (R) = 10% per annum
Formula Used:
SI = (P × R × T) ÷ 100
Calculations:
⇒ 700 = (P × 10 × 2) ÷ 100
⇒ 700 = (P × 20) ÷ 100
⇒ 700 = P ÷ 5
⇒ P = 700 × 5
⇒ P = 3500
∴ The correct answer is ₹3500.
Additional Information
Total Amount Formula
The total sum returned after adding interest is Amount (A) = P + SI = P × (1 + RT/100).
Constant Nature of SI
Unlike compound interest, Simple Interest remains the same every year because it is always calculated on the original Principal.
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.