Question

A person invests 5000 at a simple interest rate of 8% per annum for 3 years. What is the total interest earned by the person at the end of the period?

Hint:

Remember: For simple interest, use the formula \( \text{SI} = \frac{\text{P} \times \text{R} \times \text{T}}{100} \). Ensure the rate is in percentage and time is in years.

Answer 1

To solve the problem, we need to calculate the total simple interest earned by the person after 3 years.

1. Understanding the Concept of Simple Interest: Simple Interest is the extra money earned or paid for using someone’s money for a certain period of time. It is calculated only on the original principal amount throughout the entire period.

Formula used:

Simple Interest (SI) = (Principal × Rate × Time) / 100

Where: - Principal is the initial amount invested = ₹5000 - Rate is the annual rate of interest = 8% - Time is the duration of investment = 3 years

 

2. Substituting the Values: We substitute the given values into the formula: $ \text{SI} = \frac{5000 \times 8 \times 3}{100} $

3. Step-by-Step Calculation: First, multiply the numbers in the numerator: $ 5000 \times 8 = 40000 $ $ 40000 \times 3 = 120000 $ Now divide by 100: $ \frac{120000}{100} = ₹1200 $

4. Interpreting the Result: This means the person earns ₹1200 as interest for keeping ₹5000 invested at 8% for 3 years.

Final Answer: The total interest earned by the person at the end of the period is ₹1200.