Question

How much interest does an Rs. 6100 investment earn at \[6\% \] over seven years?
A. 1356
B. 2562
C. 3762
D. 4239

Answer 1

Hint: First, we will use the formula of simple interest, \[{\text{S.I.}} = \dfrac{{{\text{P}} \times {\text{T}} \times {\text{R}}}}{{100}}\], where \[{\text{P}}\] is principal starting amount of money, \[{\text{R}}\] is the interest rate per year and \[{\text{T}}\] is the time the money is invested in years. Apply this formula, and then use the given conditions to find the required value.

Complete step by step answer:

Let us assume that \[{\text{P}}\] represents the principle and R represents the rate of interest.
We are given that Rs. 6100 investment was earned at \[6\% \] over seven years.
We know that the formula of simple interest, \[{\text{S.I.}} = \dfrac{{{\text{P}} \times {\text{T}} \times {\text{R}}}}{{100}}\], where \[{\text{P}}\] is principal starting amount of money, \[{\text{R}}\] is the interest rate per year and \[{\text{T}}\] is the time the money is invested in years.
First, we have to find the value of R, T and P for the above formula of simple interest.
\[{\text{R}} = 6\]
\[{\text{P}} = 6100\]
\[{\text{T}} = 7\]
We will now substitute the above value, P, R and T to compute the simple interest using the above formula.
\[
   \Rightarrow {\text{S.I.}} = \dfrac{{6100 \times 6 \times 7}}{{100}} \\
   \Rightarrow {\text{S.I.}} = {\text{Rs. }}2562 \\
 \]
Thus, the simple interest is Rs. 2562.
Hence, option B is correct.

Note: In solving these types of questions, you should be familiar with the formulae of simple interest. It is also important to understand in applying both the simple interest and compound interest formula accordingly. One should remember that simple interest is computed only on the principle, but the compound interest is calculated on both the accumulated interest and the principal, or else the answer will be wrong.