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Any sum invested for 3.5 years at 12% annual interest becomes Rs. 994 at maturity. What was the principal amount invested?
1. Rs. 700  
2. Rs. 750  
3. Rs. 725   
4. Rs. 720   

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Correct Answer - Option 1 : Rs. 700  

Given:

Rate of interest = 12%

time = 3.5 years

Formula used:

Simple interest = (principal amount × rate of interest × time)/100

Calculation:

Let P be the principal amount

So, S.I. = 994 – P

⇒ 994 – P = (P × 12 × 3.5)/100

⇒ 99400 – 100P = 42P

⇒ 142P = 99400

⇒ P = 700 Rs

∴ The principal amount invested was Rs. 700.

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