Question

What amount a person will get after 2.5 years at 5.5 percent per annum, if he invested lakh in a bank?

Answer 1

Hint – In this question the amount received by a person is the sum of interest and principal amount, so first calculate the simple interest because the interest is simple it is not compounded so we use a simple interest formula, so use this concept to reach the solution of the question.
Given data
Principal amount (P) = 1 lakh
Rate of interest (r) = 5.5 percent
Time (t) = 2.5 years
As we know that the interest is simple it is not compounded, therefore simple interest is calculated according to the formula given below,
Simple interest = $S.I = \dfrac{{{\text{p}}{\text{.r}}{\text{.t}}}}{{100}}$
$S.I = \dfrac{{1 \times 5.5 \times 2.5}}{{100}}lakh$
$S.I = \dfrac{{13.75}}{{100}} = 0.1375\;{\text{lakh}}$
Now we have to add this value of simple interest in the principal amount (P) to get the total amount (A) a person will receive.
$\therefore A = P + S.I$
$ \Rightarrow A = 1 + 0.1375 = 1.1375{\text{ lakh}}$
So a person will get 1.1375 lakh after 2.5 years, at 5.5 percent per annum.

Note – In such types of questions the key concept we have to remember is that always recall the formula of simple interest which is stated above and simplify then add this value in the principal amount we will get the total amount a person receives after 2.5 years.