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A woman has invested ₹85,000 at a rate of 721% per annum simple interest for 4 years. Find the amount that she will receive after 4 years.
₹69,600
₹75,000
₹1,08,750
₹1,10,500
₹1,10,500
Calculate interest as 7.5% for 4 years = 30%. Since 10% of 85,000 is 8,500, 30% is 3 × 8,500 = 25,500. Add this to the principal: 85,000 + 25,500 = 110,500.
Principal (P) = ₹85,000, Rate (R) = 7 1/2% = 7.5% per annum, Time (T) = 4 years
SI=100P×R×TandA=P+SI
Calculate interest as 7.5% for 4 years = 30%. Since 10% of 85,000 is 8,500, 30% is 3 × 8,500 = 25,500. Add this to the principal: 85,000 + 25,500 = 110,500.
Confusing simple interest with compound interest or failing to convert the mixed fraction 7 1/2% correctly into the decimal 7.5%.
Identify given values
Identify the principal, rate of interest, and time period provided.
P=85000,R=7.5%,T=4
Calculate Simple Interest (SI)
Using the formula for simple interest, calculate the interest earned over 4 years.
SI=10085000×7.5×4=850×30=25500
Calculate Total Amount (A)
Add the interest to the original principal to find the total amount received.
A=85000+25500=110500
D is correct because the simple interest is ₹25,500 and the final amount is ₹85,000 + ₹25,500 = ₹1,10,500.
This concept is foundational for understanding Compound Interest, where interest is added to the principal annually, resulting in exponential growth.
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