If the simple interest on a sum of money for 5 years is $300 at a rate of 4% per

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Question: If the simple interest on a sum of money for 5 years is $300 at a rate of 4% per annum, what is the principal? (2000)

Options:

Correct Answer: $1200

Exam Year: 2000

Solution:

Using SI = PRT, we have 300 = P * 4/100 * 5. Solving for P gives P = $1500.

If the simple interest on a sum of money for 5 years is $300 at a rate of 4% per annum, what is the principal? (2000)

If the simple interest on a sum of money for 5 years is $300 at a rate of 4% per annum, what is the principal? (2000)

Step 1: Understand the formula for Simple Interest (SI), which is SI = PRT, where P is the principal amount, R is the rate of interest per annum, and T is the time in years.
Step 2: Identify the values given in the question: SI = $300, R = 4% (which is 4/100), and T = 5 years.
Step 3: Substitute the known values into the formula: 300 = P * (4/100) * 5.
Step 4: Simplify the equation: 300 = P * 0.04 * 5.
Step 5: Calculate 0.04 * 5, which equals 0.2. Now the equation is: 300 = P * 0.2.
Step 6: To find P, divide both sides of the equation by 0.2: P = 300 / 0.2.
Step 7: Calculate 300 / 0.2, which equals 1500. Therefore, the principal amount P is $1500.

Simple Interest Calculation – Understanding the formula for simple interest (SI = PRT) and how to manipulate it to find the principal amount.