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**Hint:**We will first discuss about the simple interest. Simple interest is the method to calculate the interest for money for a time period. Now the simple interest for a principal amount of $P$ at an interest rate of $R$ for a time period of $T$ years is

$SI=\dfrac{PRT}{100}$

So, from the above equation, the value of the principle amount is given by

$P=\dfrac{SI\times 100}{RT}$

**Complete step-by-step solution:**Given that,

Simple interest $\left( SI \right)=4,320$

Rate of Interest $\left( R \right)=4$

Time period $\left( T \right)=6$years

From the formula of Simple Interest $SI=\dfrac{PRT}{100}$we have principle amount as

$\begin{align}

& P=\dfrac{SI\times 100}{RT} \\

& =\dfrac{4320\times 100}{4\times 6} \\

& =18000

\end{align}$

**Hence the principle amount is Rs.$18000$**

**Note:**In the problem they mentioned simple interest. If they mentioned compounded interest then we had to use the formula $A=P{{\left( 1+\dfrac{R}{n} \right)}^{nt}}$ where \[A\] is the Total amount, $P$ is the principle amount, $R$ is the interest rate in Decimals, $n$ is the number of times that the interest is compounded yearly, $t$ is the time period in years. So, assume the principle amount $P$ as $x$ and from given data $R=\dfrac{4}{100}=0.04$

$n$ is the number of times interest compounded yearly i.e. $n=1$ and time period is $t=6$years. Now the total amount is

$\begin{align}

& A=P{{\left( 1+\dfrac{R}{n} \right)}^{nt}} \\

& =x{{\left( 1+\dfrac{0.04}{1} \right)}^{1\left( 6 \right)}} \\

& =x{{\left( 1.004 \right)}^{6}} \\

& =1.0242x

\end{align}$

Now the compounded interest is given by

$\begin{align}

& CI=A-p \\

& =1.0242x-x \\

& =x\left( 1.0242-1 \right) \\

& =0.0242x

\end{align}$

But from the given data we have compounded interest as $CI=4,320$, then

$\begin{align}

& 0.0242x=4320 \\

& x=\dfrac{4320}{0.0242} \\

& =178512

\end{align}$

So, the principle amount if the interest is compounded annually is Rs.$1,78,512$

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