Correct Answer - Option 1 : 120
Given:
Present worth(Amount) = Rs. 132
Rate of interest = 5%
Time = 2 years
Formula used:
Simple Interest = (Principal × Rate × Time)/100
Amount = Principal + Simple interest
Where, Amount = A, Simple interest = SI, Principal = P, Rate = R, Time = T
Calculation:
Let the principal be Rs. P
As we know that
Amount = Principal + Simple interest
⇒ Rs. 132 = P + SI
⇒ (132 - P) = SI
Now,
Simple Interest = (Principal × Rate × Time)/100
⇒ (132 - P) = (P × 5 × 2)/100
⇒ (132 - P) × 10 = P
⇒ 1320 - 10P = P
⇒ 1320 = 11P
⇒ Rs. 120 = P
∴ The principal is Rs. 120.