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Rani has borrowed an amount of ₹2,00,000 from a bank to start a business. How much simple interest will she pay at a rate of 7% per annum after 2 years?
₹28,500
₹28,000
₹26,000
₹24,000
₹28,000
Calculate 7% of 2,00,000 as 14,000 for one year, then multiply by 2 years to get 28,000.
Principal P = ₹2,00,000, Rate of interest R = 7% per annum, Time T = 2 years
SI=100P×R×T
Calculate 7% of 2,00,000 as 14,000 for one year, then multiply by 2 years to get 28,000.
Confusing Simple Interest with Compound Interest, which would result in a higher value than the simple linear calculation.
Identify given values
Extract the principal amount, interest rate, and time duration from the problem statement.
P=200000,R=7,T=2
Apply Simple Interest formula
Use the standard formula for calculating simple interest.
SI=100200000×7×2
Calculate final value
Simplify the expression by canceling out zeros and multiplying the remaining numbers.
SI=2000×14=28000
B is correct because the simple interest for 2 years is calculated as ₹28,000.
This concept is foundational for calculating EMI and loan repayments, which frequently appears in data interpretation questions.
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