Question

The sum of the Principle and its interest is known as?
A) Simple Interest
B) Compound Interest
C) Rate per annum
D) Amount

Answer 1

Hint: These terms are used when we borrow or deposit a certain amount of money charged with an interest. We can know what the various quantities given in the option mean and then it can be concluded which amongst them would satisfy the given statement.

Complete step-by-step answer:
We can borrow or deposit a certain amount of money. But this money is not borrowed or deposited at free cost but at some charge, as a percent of money borrowed. This charge is known as Interest and the initial money borrowed or deposited is known as Principal.
Evaluating every option:
A) Simple Interest: It is a type of interest that is applied over the amount borrowed or invested throughout the loan duration without taking into consideration the past interest over consecutive years.
B) Compound Interest: It is a type of interest that is applied over the principal and interest accumulated in the past and thus is also known as interest on interest.
C) Rate per annum: The rate of interest at which the money is borrowed or deposited annually or yearly is known as the rate per annum
D) Amount: The final money to be received after all the interest gets accumulated over the years is known as amount. It is the sum of principal and interest money.
Therefore, it can be concluded that the sum of the Principle and its interest is known as Amount and the correct option is D).
So, the correct answer is “Option D”.

Note: We can also express the things mathematically as:
Amount = Principal + Interest
And when we want the value for interest, this formula can be modified to
Interest = Amount - Principal