Question : What is the present worth of INR 1,100 due in 2 years at 5% simple interest per annum?
Option 1: INR 3,000
Option 2: INR 2,000
Option 3: INR 1,000
Option 4: INR 1,500
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Correct Answer: INR 1,000
Solution :
Let the present worth be INR $x$.
We know that simple interest = Amount - Principal
So, $1100−x=x\times(\frac{5}{100})\times2$
⇒ $x+10x=11000$
⇒ $x=\frac{11000}{11}$
⇒ $x=1000$
Hence, the correct answer is INR 1,000.
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