Question

A farmer borrowed Rs. 3600 at 15% per annum. At the end of 4 years, he cleared his account by paying Rs. 4000 and a goat. The cost of the goat is :
A) 1000
B) 1200
C) 1550
D) 1760

Answer 1

Hint: Simple Interest: The simple interest can be defined as the principal amount of loan or deposit, a person makes into their bank account.
$$\text{Interest}=\text{Principal}\times \text{Rate}\times \text{Time}$$
The principal refers to the original amount given as a loan.
The rate refers to the percentage of the original amount you are to pay back.
Time refers to the duration in which you are supposed to pay back.

Complete step by step solution:
Money farmer borrowed amount (Principal) = Rs 3600
Farmer borrowed money at the rate of (Rate) = 15%
Farmer borrowed money for the time period(Time) = 4 years
Now after using the equation from the hint and solving the equation we can calculate the interest as mentioned below:-
$$\text{Interest}=\text{Principal}\times \text{Rate}\times \text{Time}$$
$$\Rightarrow Interest=3600\times 15\mathrm{\%}\times 4$$
$$\Rightarrow Interest={\displaystyle \frac{3600\times 15\times 4}{100}}$$
$$\Rightarrow Interest=2160$$
Simple Interest =$Rs.2160$
As taking principal amount and simple interest from the above calculation, we can calculate the amount after 4 years.
Accumulated Amount after 4 years including the simple interest = $Rs(3600+2160)$
$=Rs5760$
Cost of goat bought by the farmer $=Rs(5760-4000)$
$=Rs1760$

As the cost of goat bought by the farmer is Rs. 1760, So option (D) is the correct answer.

Note:
For calculating the amount after period add simple interest to the principal.
The loan period or duration is the time that the principal amount is either borrowed or invested. It is usually given in years, but in some cases, it may be quoted in months or even days. If that is the case, we need to perform a conversion from a period given in months or days, into years.