Question : A sum becomes INR 5400 in 4 years at the rate of 20% per annum on simple interest. What is the sum?
Option 1: INR 3000
Option 2: INR 2500
Option 3: INR 4000
Option 4: INR 2000
Correct Answer: INR 3000
Solution :
Rate, $R$ = 20%
Term, $n$ = 4
Let $P$ be the principal.
Amount = INR 5400
Simple interest = $5400 - P$
We know, Simple interest = $\frac{\text{Principal × Rate × Time}}{100}$
$⇒5400 - P=\frac{P×20×4}{100}$
$⇒5400=\frac{4P}{5} + P$
$\therefore P=\frac{5400×5}{9} = 3000$
Hence, the correct answer is INR 3000.
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