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What sum will earn a simple interest of ₹960 in 3 years at 16% per year rate of interest?
₹1,800
₹2,000
₹2,200
₹1,600
₹2,000
Calculate the total percentage interest for 3 years: 3 × 16% = 48%. Since 48% of P = 960, then 1% = 20, and 100% = 2000.
Simple Interest (SI) = ₹960, Time (T) = 3 years, Rate of Interest (R) = 16% per annum.
P=R×TSI×100
Calculate the total percentage interest for 3 years: 3 × 16% = 48%. Since 48% of P = 960, then 1% = 20, and 100% = 2000.
Confusing Simple Interest with Compound Interest, or forgetting to multiply rate by time before dividing the interest amount.
Identify Given Variables
We are provided with the Simple Interest SI=960, the time period T=3 years, and the annual rate of interest R=16%.
SI=960,T=3,R=16
Rearrange Formula for Principal
The formula for Simple Interest is SI=100P×R×T. To find the sum (Principal P), we rearrange it as P=R×TSI×100.
P=16×3960×100
Calculate the Result
Substitute the values: P=4896000. Dividing 960 by 48 gives 20, so 96000/48=2000.
P=2000
B is correct because the calculated principal sum is ₹2,000.
This concept is foundational for calculating EMI and Loan amortization in banking exams; always convert percentages to decimals or fractions for faster mental math.
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