Question : A person lent a certain sum of money at the annual rate of 20 percent on simple interest. In 10 years, the interest amounted to Rs. 800 more than the sum lent. What is the sum lent?
Option 1: Rs. 800
Option 2: Rs. 500
Option 3: Rs. 1200
Option 4: Rs. 400
Correct Answer: Rs. 800
Solution :
Let the sum lent be $P$.
So, simple interest = P + 800
Time = 10 years
Rate = 20%
We know,
Simple interest = $\frac{\text{Principal × Rate × Time}}{100}$
$⇒ P + 800 = \frac{P×20×10}{100}$
$⇒ P + 800 = 2P$
$⇒ P = 800$
Hence, the correct answer is Rs. 800.
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