Discussion

A sum of ₹ 5,000 is lent at 8% per annum simple interest. What will be the interest after 3 years ?

Answer: B

The interest is ₹ 1,200.

Simple interest is principal times rate times time, divided by 100:

\[ SI = \frac{5000 \times 8 \times 3}{100} = 1200 \]

So the interest after 3 years is ₹ 1,200. Each year earns ₹ 400 (8% of 5,000), and three years earn three times that.

₹ 1,000 and ₹ 1,400 do not match any whole number of years at ₹ 400 a year, and ₹ 1,800 would need 4.5 years.

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