What simple interest is earned on Rs. 5,000 at 8% per annum for 3 years?
Correct answer: A. Rs. 1,200
- A. Rs. 1,200
- B. Rs. 1,000
- C. Rs. 1,240
- D. Rs. 1,400
Explanation
Simple interest is calculated as P × r × t. Thus, Rs. 5,000 × 0.08 × 3 equals Rs. 1,200; the principal is not added to the interest during the period.
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About Financial Mathematics: Interest, Annuities and Discounting
Financial mathematics covers simple and compound interest, principal, rate, time, accumulated value and present value. It also includes annuities, regular payments, sinking funds, loan repayments and discounting, with a distinction between ordinary annuities and annuities due and between trade discount and mathematical discount.
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