A sum of money amounts to ₹1,800 when invested at 6.25% p.a. simple interest for a period of eight years. Find the principal.
Question
A sum of money amounts to ₹1,800 when invested at 6.25% p.a. simple interest for a period of eight years. Find the principal.
Solution
To find the principal, we need to use the formula for simple interest which is:
I = PRT/100
Where: I = Interest P = Principal amount (the initial amount of money) R = Rate of interest T = Time (in years)
In this case, we know that the total amount (A) after 8 years is ₹1,800, the rate of interest (R) is 6.25% per annum, and the time (T) is 8 years. The total amount is made up of the principal (P) and the interest (I), so we can write:
A = P + I
Substituting the formula for I from above, we get:
A = P + PRT/100
Rearranging for P, we get:
P = A / (1 + RT/100)
Substituting the given values, we get:
P = 1800 / (1 + (6.25 * 8) / 100)
Calculating the above expression will give us the principal amount.
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