If the simple interest on a sum of money is $450 after 3 years at a rate of 5% p

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Question: If the simple interest on a sum of money is $450 after 3 years at a rate of 5% per annum, what is the principal amount?

Options:

Correct Answer: $2500

Solution:

Principal = (Simple Interest × 100) / (Rate × Time) = (450 × 100) / (5 × 3) = $3000.

If the simple interest on a sum of money is $450 after 3 years at a rate of 5% per annum, what is the principal amount?

If the simple interest on a sum of money is $450 after 3 years at a rate of 5% per annum, what is the principal amount?

Step 1: Understand the formula for simple interest, which is: Simple Interest = (Principal × Rate × Time) / 100.
Step 2: Rearrange the formula to find the Principal: Principal = (Simple Interest × 100) / (Rate × Time).
Step 3: Identify the values given in the question: Simple Interest = $450, Rate = 5%, Time = 3 years.
Step 4: Substitute the values into the rearranged formula: Principal = (450 × 100) / (5 × 3).
Step 5: Calculate the denominator: 5 × 3 = 15.
Step 6: Calculate the numerator: 450 × 100 = 45000.
Step 7: Divide the numerator by the denominator: 45000 / 15 = 3000.
Step 8: Conclude that the Principal amount is $3000.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Simple Interest = Principal × Rate × Time.