Question

Himanshu borrows Rs. 1000 from the bank. The principal of the loan is _______.
(A). 1000
(B). 2000
(C). 3000
(D). 4000

Answer 1

Hint: It is a word problem related to the money exchange, and the only thing that you need to focus on for solving this problem is the definition of principal, which states that the principal is the actual amount that is either borrowed or invested.

Complete step-by-step solution -
Before starting with the question, let us know about interest, principal, and amount.
Interest in the financial term is the amount that a borrower pays to the lender along with the repayment of the actual principal amount.
Broadly, there are two kinds of interest, first is the simple interest, and the other is the compound interest.
The principal is the actual amount that is either being invested or borrowed, while the amount is the amount that we get after including the interest with the principal. The relation between the interest, the principal, and the amount can be mathematically written as:
Amount = principal + interest
Now, if we focus on the above definitions, we will find that the principal in the case of Himanshu is the amount he borrowed, which is equal to Rs. 1000. Hence the answer is option (a).

Note: Be careful with the calculations and solving part as there is a possibility of making a mistake in the calculations. It is recommended to learn all the basic formulas related to simple and compound interests as they are very useful in the problems related to money exchange.