Question

Find the simple interest on Rs 5000 at 10% per annum for 2 years.

• A. Rs 500
• B. Rs 1000
• C. Rs 1500
• D. Rs 2000

Hint:

Simple interest grows linearly every year.
For quick mental calculation: \( 10% \) of \( 5000 \) is \( 500 \).
Since simple interest remains constant each year, the interest for \( 2 \) years is simply \( 500 \times 2 = 1000 \).
Using this unitary method can help you solve simple interest problems without paper and pencil.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Simple interest is a quick and straightforward method for calculating the interest charge on a loan or an investment. It is determined solely by multiplying the initial borrowed or invested sum (the principal) by the specified annual percentage interest rate and the total duration of the loan in years. The interest accumulated remains identical during each year.
Step 2: Key Formula or Approach:
The standard formula to compute simple interest ($SI$) is: $$ SI = \frac{P \times R \times T}{180} $$ Wait, the formula denominator is 100, let's write it down correctly: $$ SI = \frac{P \times R \times T}{100} $$ Where: - $P$ is the Principal amount = Rs 5000 - $R$ is the annual Rate of interest = 10% - $T$ is the Time duration = 2 years
Step 3: Detailed Explanation:
Let's substitute the given numerical parameters directly into the simple interest equation: $$ SI = \frac{5000 \times 10 \times 2}{100} $$ Simplify the calculation by canceling out the zeros in the numerator and denominator: $$ SI = 50 \times 10 \times 2 $$ $$ SI = 50 \times 20 = 1000 $$ The calculated simple interest over the 2-year duration is Rs 1000. This matches option (B).
Step 4: Final Answer:
The simple interest on the amount is Rs 1000.