Question

Find the sum which will amount to Rs 700 in 5 years at 8% P.A:

Hint: Simple interest is a quick and easy method of calculating the interest charge on a loan.
Simple interest is formulated as =$\dfrac{{p \times r \times t}}{{100}}$,
Where p = principle amount
R = rate 0f interest
T = time period
And amount to be returned $= {\text{ }}S.I{\text{ }} + {\text{ }}P$
i.e. $A{\text{ }} = {\text{ }}S.I{\text{ }} + {\text{ }}P\;\;\;\;$

Complete step by step answer:

Given amount $= {\text{ }}700,{\text{ }}R{\text{ }} = {\text{ }}8\%$per annum time $= {\text{ }}5$ years
Let principle amount be $= {\text{ }}Rs{\text{ }}100$
Let us denote the principle amount by ‘p’, amount by ‘A” and rate by “R” while time by ‘T’.
Formula for simple interest is
S.I =$\dfrac{{p \times r \times t}}{{100}}$
S.I = $\dfrac{{100 \times 8 \times 5}}{{100}}$
S.I =$8 \times 5$
S.I $= {\text{ }}40$
Amount (a) = principle + simple interest
A = P+S.I
A $=$Rs $100 + {\text{ }}40$ [from 1]
If amount is Rs 140, then principle $= {\text{ }}100$
By unitary method,
If amount is Rs 140, then principle $=$ Rs $= 1000$
If amount is Rs 1, then principle = Rs =$\dfrac{{100}}{{140}}$
If amount is Rs 700, then principle = Rs$\dfrac{{100}}{{140}} \times 700$
$= {\text{ }}Rs{\text{ }}500\;\;\;\;\;$

Note: Simple interest is determined by multiplying the daily interest rate by the principal by the number of days. It is applied on principal amount only.
We can also do this question by letting the principle be ‘x’.