Question

Find the Simple Interest on Rs. 100,000 for 2 years at 10% per annum.
a) 20,000
b) 25,000
c) 30,000
d) 40,000

Answer 1

Hint: Before solving this question, we must know about simple interests.
SIMPLE INTEREST: Simple interest is a quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
The formula used to calculate Simple Interest is:-
Simple Interest \[=\dfrac{P\times R\times T}{100}\]
Where, P = Principal Amount, R = Rate and T = Time Period

Complete step-by-step answer:
According to the question,
Principal Amount = 100,000
Rate = 10%
Time Period = 2 years.
∵ Simple Interest =
\[\begin{array}{*{35}{l}}
   =1000\times 10\times 2 \\
   \begin{align}
  & =10000\times 2 \\
 & =20,000 \\
\end{align} \\
\end{array}\]
Hence, the answer of this question is (a) 20,000, i.e. the Simple Interest on Rs. 100,000 for 2 years at 10% per annum is 20,000.

NOTE:-
The student must do the calculations very carefully as any mistake in the calculation can make the answer wrong.
We can calculate Interest by one more method, i.e. Compound Interest.
COMPOUND INTEREST: Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. It is different from simple interest because in Simple Interest, the interest is not added to the principal while calculating the interest.