What is the present worth of ₹ 2,400 due in 4 years at a rate of 5% simple interest per annum?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. ₹ 2,000.
Given,
Amount = 2400, time = 4 years and Rate = 5%
We know,
Simple interest (SI) = PRT/100
Amount = SI + P
Where, P = principal, R = rate and T = time
According to the question,
⇒ 2400 = P(1 + RT/100)
⇒ 2400 = P(1 + 20/100)
⇒ P = 2400 /1.2 = 2000