A person lent a certain sum of money at simple interest at the rate of 24 percent per annum. In 5 years the amount of interest became Rs 1200 more than the amount lent. What is the amount lent?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Rs. 6000 .
The sum of money lent be ( P ) (the principal).
The rate of interest is 24% per annum, and the time period is 5 years.
Simple Interest (SI) = (P × R × T) / (100)
( R ) is the rate of interest per annum = 24%
( T ) is the time period in years = 5 years
⇒ Interest = P + 1200
⇒ Simple Interest (SI) = (P × 24 × 5) / (100) = (120P) / (100) = 1.2P
⇒ 1.2P = P + 1200
⇒ 1.2P - P = 1200
⇒ 0.2P = 1200
⇒ P = 1200 / 0.2 = 6000
The sum lent (the principal) is Rs. 6000.