Question : A sum becomes INR 12960 in 2 years at the rate of 4% per annum on simple interest. What is the sum?
Option 1: INR 10000
Option 2: INR 12200
Option 3: INR 12000
Option 4: INR 11600
Correct Answer: INR 12000
Solution :
Amount = INR 12960
Term, $n$ = 2 years
Rate, $R$ = 4%
Let $P$ be the principal sum.
Simple interest = $12960 - P$
We know, Simple interest = $\frac{\text{Principal × Time × Rate}}{100}$
$⇒12960-P = \frac{P×2×4}{100}$
$⇒12960 = P + \frac{8P}{100}$
$\therefore P=\frac{1296000}{108}=12000$
Hence, the correct answer is INR 12000.
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