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What is the simple interest on $2000 at 5% per annum for 3 years?
200
300
400
500
300
Calculate the effective percentage: 5% for 3 years is 15% of the total amount. Just find 15% of 2000, which is 15 * 20 = 300.
Principal P = $2000, Rate R = 5% per annum, Time T = 3 years.
SI=100P├ЧR├ЧTтАЛ
Calculate the effective percentage: 5% for 3 years is 15% of the total amount. Just find 15% of 2000, which is 15 * 20 = 300.
Students often confuse Simple Interest (SI) with Compound Interest (CI); remember that in SI, the principal amount remains constant for all years.
Identify given variables
Extract the principal P, rate of interest R, and time T from the problem statement.
P=2000,R=5,T=3
Substitute into the SI formula
Plug the values into the standard Simple Interest formula SI=100P├ЧR├ЧTтАЛ.
SI=1002000├Ч5├Ч3тАЛ
Perform the calculation
Simplify the expression by canceling the zeros in the denominator and numerator: 20├Ч5├Ч3.
SI=20├Ч15=300
B is correct because the calculated simple interest is exactly $300.
Understanding simple interest is the foundation for Compound Interest; remember that Compound Interest accounts for interest on interest, which is calculated using the formula A=P(1+100RтАЛ)T.
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