Question

A certain sum of money amount from Rs. 2000 to Rs. 2400 in a period @ 5% p.a. rate of interest. In 7 years, what will be the simple interest on sum? 
1. 1500
2. 700
3. 350
4. 450

Answer 1

Correct Answer - Option 2 : 700

Given:

Amount = Rs. 2400

Principal = Rs. 2000

Rate of interest = 5% p.a.

Formula Used:

Amount =  Principal + Simple interest

Simple interest  = (Principal × Time × Rate of interest)/100

Calculation:

Simple interest = Amount - Principal 

⇒ Simple interest = 2400 - 2000 = 400

Simple interest = (Principal × Time × Rate of interest)/100

⇒ 400 = (2000 × Time × 5)/100

Time = 4 years

Now,

⇒ Simple interest = (2000 × 7 × 5)/100

⇒ Simple interest = Rs. 700

∴ Simple interest is Rs. 700

The correct option is 2 i.e. Rs. 700