A principal amount of $1200 is invested at a rate of 10% per annum for 3 years.

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Question: A principal amount of $1200 is invested at a rate of 10% per annum for 3 years. What is the total amount after 3 years?

Options:

Correct Answer: $1440

Solution:

Total Amount = P + SI = 1200 + (1200 * 0.10 * 3) = 1200 + 360 = $1440

A principal amount of $1200 is invested at a rate of 10% per annum for 3 years. What is the total amount after 3 years?

A principal amount of $1200 is invested at a rate of 10% per annum for 3 years. What is the total amount after 3 years?

Step 1: Identify the principal amount (P), which is $1200.
Step 2: Identify the interest rate (r), which is 10% per annum. Convert this percentage to a decimal by dividing by 100, so 10% becomes 0.10.
Step 3: Identify the time period (t), which is 3 years.
Step 4: Calculate the simple interest (SI) using the formula: SI = P * r * t.
Step 5: Substitute the values into the formula: SI = 1200 * 0.10 * 3.
Step 6: Calculate the simple interest: SI = 1200 * 0.10 = 120, then 120 * 3 = 360.
Step 7: Add the simple interest to the principal amount to find the total amount: Total Amount = P + SI.
Step 8: Substitute the values: Total Amount = 1200 + 360.
Step 9: Calculate the total amount: Total Amount = 1440.

Simple Interest Calculation – The question tests the ability to calculate simple interest using the formula SI = P * r * t, where P is the principal, r is the rate, and t is the time.