Question

Find the simple interest on Rs. 5000 for 2 years at 5% per annum.
(a) Rs. 450
(b) Rs. 500
(c) Rs. 550
(d) Rs. 600

Answer 1

Hint: First, we will understand the concept of simple interest i.e. given as a method of calculating the interest amount for some principal amount of money. Then for finding interest, we will use the formula as $ \dfrac{PRN}{100} $ where, P is principal amount i.e. Rs. 5000, R is rate of interest i.e. 5% and N is time period i.e. 2 years. On solving this, we will get the interest amount.

Complete step-by-step answer:
We will first understand the definition of simple interest. It is given as a method of calculating the interest amount for some principal amount of money. In the real world, we often borrow money from banks in the form of a loan. During payback, apart from loan amount, we have to pay more money that depends on the loan amount as well as the time for which we borrow. This is called simple interest.
Here, we will find simple interest (SI) using the formula $ \dfrac{PRN}{100} $ where, P is principal amount i.e. Rs. 5000, R is rate of interest i.e. 5% and N is time period i.e. 2 years.
So, on substituting the values we get answer as
 $ SI=\dfrac{PRN}{100} $
 $ SI=\dfrac{5000\times 5\times 2}{100} $
On solving, we get as
 $ SI=50\times 5\times 2 $
 $ SI=Rs.500 $
Thus, simple interest is Rs. 500.
Hence, option (a) is the correct answer.

Note: Be careful while selecting the formula. Students make mistake in selecting the formula i.e. instead of selecting $ \dfrac{PRN}{100} $ , they select $ P{{\left( 1+\dfrac{R}{100} \right)}^{N}} $ which is generally used at time of compound interest amount to be found. Thus, the answer will be totally wrong. So, students should know proper concepts of simple interest and compound interest and then select the formula to avoid mistakes.