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What would be the annual interest (in ₹) accrued on a deposit of ₹20,000 in a bank that pays a 5% per annum rate of simple interest?
1800
1200
1500
1000
1000
To find 5% of any number, calculate 10% (by shifting the decimal one place left: 20000 becomes 2000) and divide by 2.
Principal amount P = ₹20,000, Rate of interest R = 5% per annum, Time period T = 1 year.
SI=100P×R×T
To find 5% of any number, calculate 10% (by shifting the decimal one place left: 20000 becomes 2000) and divide by 2.
Students often mistakenly confuse Simple Interest (SI) with Compound Interest (CI) or accidentally miscalculate the decimal placement when finding 5% of 20,000.
Identify given variables
Identify the principal P=20000, the annual interest rate R=5%, and time T=1 year.
P=20000,R=5,T=1
Apply Simple Interest formula
Substitute the given values into the formula SI=100P×R×T.
SI=10020000×5×1
Perform calculation
Simplify the expression by canceling the zeroes: 20000÷100=200. Then multiply 200×5=1000.
SI=200×5=1000
D is correct because the simple interest accrued for one year is calculated as ₹1000.
This percentage calculation is foundational for Profit and Loss and Tax calculation problems in competitive quantitative aptitude exams.
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