What principal would amount to ₹21,420 in 2 years at the rate of 9.5% p.a. simple interest?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. ₹18,000.
Simple Interest = (P × R × T)/100
Total amount (A) = P + [(P × R × T)/100]
Where, P = Principal; R = Rate of interest per annum; T = Total time
Total amount (A) = ₹21,420
Total time (T) = 2 years
Rate of interest per annum (R) = 9.5%
So, 21420 = P + [(P × 9.5 × 2)/100]
⇒ 21420 = P + (19P/100)
⇒ 1.19P = 21420
⇒ P = 21420/1.19 = 18000
Therefore, the principal amount would be ₹18,000.