Question

Mr. X took a loan for 6 years at the rate of 5% p.a. S.I. If the total interest paid was Rs. 1230, the principal amount was:

• A. \( \text{Rs. 4100} \)
• B. \( \text{Rs. 4920} \)
• C. \( \text{Rs. 5000} \)
• D. \( \text{Rs. 5300} \)

Hint:

Simple interest grows linearly with time, making it easy to calculate for short-term loans.

Answer 1

The Correct Option is A

The formula for simple interest (SI) is: \[ SI = \frac{P \times R \times T}{100} \] where \( P \) is the principal amount, \( R \) is the rate of interest, and \( T \) is the time. 

Rearranging the formula to find \( P \): \[ P = \frac{SI \times 100}{R \times T} \] Substituting the values: \[ P = \frac{1230 \times 100}{5 \times 6} = \frac{123000}{30} = 4100 \] Thus, the principal amount is Rs. 4100.