Question: If the simple interest on a sum of money for 3 years is $150 at a rate of 5% per annum, what is the principal amount?

Options:

1. $1000
2. $900
3. $800
4. $750

Correct Answer: $1000

Solution:

Principal = (Simple Interest × 100) / (Rate × Time) = (150 × 100) / (5 × 3) = $1000.