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What sum of money (in ₹) will yield ₹720 as simple interest in 3 years at 6% per annum?
4000
4200
4400
3500
4000
Calculate the effective rate: Total interest % = R × T = 6% × 3 = 18%. Since 18% of P = 720, then 1% = 720 / 18 = 40. Thus, 100% = 40 × 100 = 4000.
Simple Interest (SI) = ₹720, Time (T) = 3 years, Rate (R) = 6% per annum.
SI=1000P×R×T
Calculate the effective rate: Total interest % = R × T = 6% × 3 = 18%. Since 18% of P = 720, then 1% = 720 / 18 = 40. Thus, 100% = 40 × 100 = 4000.
Students often confuse simple interest with compound interest or accidentally use the rate as a decimal (0.06) without remembering the division by 100 in the formula.
Identify given parameters
Identify the values: SI=720, T=3 years, and R=6%. We need to find the Principal (P).
SI=720,T=3,R=6
Rearrange the Simple Interest formula
The formula for Simple Interest is SI=100P×R×T. Rearranging to solve for P: P=R×TSI×100.
P=6×3720×100
Calculate the final value
Perform the arithmetic: P=1872000=4000.
P=4000
A is correct because the principal amount calculated using the formula is ₹4000.
This concept of 'effective rate' (R×T) is a foundation for solving complex Compound Interest problems where the time period is short or the rate is fractional.
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