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What sum of money (in ₹) will yield ₹720 as simple interest in 2 years at 6% per annum?
6400
6200
6000
5500
6000
Calculate the effective percentage: Total interest rate = 2 years × 6% = 12%. Now, 12% of P = 720, so 1% = 60, implying 100% (Principal) = 6000.
Simple Interest (SI) = ₹720, Time (T) = 2 years, Rate of Interest (R) = 6% per annum.
P=R×TSI×100
Calculate the effective percentage: Total interest rate = 2 years × 6% = 12%. Now, 12% of P = 720, so 1% = 60, implying 100% (Principal) = 6000.
Students often misinterpret '6% per annum' by applying it only to the principal once, forgetting that SI is calculated linearly over the full duration of time.
Identify given variables
We are given the simple interest SI=720, time period T=2 years, and annual interest rate R=6%. We need to find the principal amount P.
SI=720,T=2,R=6
State the Simple Interest formula
The formula for simple interest is SI=100P×R×T. Rearranging this for principal P, we get the calculation formula.
P=R×TSI×100
Substitute and solve
Substitute the values into the formula: P=6×2720×100. This simplifies to P=1272000.
P=1272000=6000
C is correct because the calculated principal amount required to yield ₹720 in 2 years at 6% is exactly ₹6000.
This concept of effective interest percentage (Rate × Time) is the foundation for solving Compound Interest problems where the growth is exponential rather than linear.
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