Simple interest on a sum for 3 years at 8% per annum is half the compound interest on Rs. 4000 for 2 years at 10% per annum. Find the simple interest principal________?
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Answer: C. Rs. 1750
Explanation
Computing the compound interest on four thousand rupees for two years gives eight hundred forty rupees. Taking half of the compound interest amount determines the simple interest value of four hundred twenty rupees. Applying the simple interest formula with the known rate and time isolates the principal at seventeen fifty. Compound interest calculates earnings on both the initial principal and accumulated interest from prior periods. Simple interest is calculated uniformly across each time period using only the initial principal balance. Financial formulas connect principal amounts, interest rates, and time periods through standard algebraic equations.
Comparing simple and compound interest helps consumers choose the most advantageous bank savings accounts. Loan officers evaluate different interest structures when designing commercial financing packages for borrowers. Personal financial planning relies on understanding how compounding accelerates wealth accumulation over time. Option A suggests fifteen fifty which underestimates the required principal needed to generate the interest. Option B proposes sixteen fifty which results from an incorrect intermediate calculation step. Option D offers two thousand which overestimates the principal required under the given interest terms.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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