Question

Vineet deposit \[Rs8500\] in a finance company which pays $ 18\% $ interest per year. Find the amount he will receive after three years.

Answer 1

Hint: The problem can be solved easily with the concept of simple interest. Interest is the amount of money gained on the principal over a certain period of time. Simple interest can be calculated easily over the principal amount with the help of formula $ SI = \dfrac{{P \times R \times T}}{{100}} $ , where P is the principal amount, T is the time duration for which the money is invested and R is the rate of interest offered by the finance company. So, we just switch in the value of these known parameters in order to get to the final answer.

Complete step by step solution:
In the given problem,
Principal amount invested by Vineet $ = P = Rs\,8,500 $
Rate of interest offered by finance company $ = 18 $ $ \% $
Time Duration of investment $ = 3years $
Now, we know that the simple interest over the principal amount for a time period can be calculated using the formula $ SI = \dfrac{{P \times R \times T}}{{100}} $ .
Now, substituting the value of the known parameters in the formula of simple interest, we get,
 $ \Rightarrow SI = \dfrac{{Rs8500 \times 18 \times 3}}{{100}} $
Cancelling the common factors in numerator and denominator, we get,
 $ \Rightarrow SI = Rs85 \times 18 \times 3 $
Now, simplifying the calculations, we get,
 $ \Rightarrow SI = Rs4590 $
So, the interest earned over the principal amount of $ Rs\,8,500 $ at the rate of $ 18\% $ per annum in three years is $ Rs4590 $ .
So, the amount received by Vineet from the finance company will be the sum of the principal amount he invested and the interest gained over the principal amount in three years.
So, the amount Vineet will receive is $ Rs8500 + Rs4590 = Rs13090 $
So, the correct answer is “Rs13090”.

Note: Simple interest is very easy to calculate when we are given the principal amount, the time duration for which the loan is taken and the rate of interest charged by the institution which in this case is the finance company. We must take care of the calculations to be sure of the final answer. We should not forget to add the principal amount in order to the simple interest to find the total amount received by the Vineet.