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Examoogle • User • info@examoogle.com • EE-2024-8821
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What sum (in ₹) will earn an interest of ₹480 in 2 years at 5% simple interest per year?
4800
4600
4950
5000
4800
Use the effective interest rate: Total interest rate = R×T=5%×2=10%. Since 10% of P=480, then P=480×10=4800.
Simple Interest (SI) = ₹480, Time (T) = 2 years, Rate of Interest (R) = 5% per annum.
SI=100P×R×T
Use the effective interest rate: Total interest rate = R×T=5%×2=10%. Since 10% of P=480, then P=480×10=4800.
Confusing Simple Interest (SI) with Compound Interest (CI). For simple interest, the principal remains constant, but many students mistakenly calculate interest on interest.
Identify given variables
We are given the Simple Interest SI=480, time T=2 years, and annual rate R=5%. We need to find the Principal sum P.
SI=480,T=2,R=5
Apply the Simple Interest formula
The formula for simple interest is SI=100P×R×T. Rearranging to solve for P, we get P=R×TSI×100.
P=5×2480×100
Calculate the principal
Substitute the values into the rearranged formula: P=1048000=4800.
P=4800
A is correct because substituting the given values into the simple interest formula yields a principal of ₹4800.
This concept is fundamental for Profit and Loss and Banking math. Always check if the time is given in months; if so, convert to years by dividing by 12.