Question

Find the simple interest on Rs 5000 at 10% per annum for 2 years.

• A. Rs 500
• B. Rs 1000
• C. Rs 1500
• D. Rs 2000

Hint:

Simple interest grows linearly every year.
For quick mental calculation: \( 10% \) of \( 5000 \) is \( 500 \).
Since simple interest remains constant each year, the interest for \( 2 \) years is simply \( 500 \times 2 = 1000 \).
Using this unitary method can help you solve simple interest problems without paper and pencil.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
This question is from business mathematics and commercial arithmetic.
We are required to compute the simple interest earned or paid on a given principal amount over a specified period at a flat annual rate of interest.

Step 2: Key Formula or Approach:
The standard formula for calculating simple interest (SI) is:
\[ SI = \frac{P \cdot R \cdot T}{100} \]
where:
- \( P \) is the Principal amount (the initial sum of money).
- \( R \) is the Rate of interest per annum (expressed as a percentage).
- \( T \) is the Time period (expressed in years).

Step 3: Detailed Explanation:
Let us list the given parameters from the problem statement:
- Principal, \( P = 5000 \)
- Rate of interest, \( R = 10% \text{ per annum} \)
- Time period, \( T = 2 \text{ years} \)
Now, substitute these values into the simple interest formula:
\[ SI = \frac{5000 \cdot 10 \cdot 2}{100} \]
Let us perform the arithmetic steps:
1. First, multiply the numbers in the numerator:
\[ 5000 \cdot 10 \cdot 2 = 5000 \cdot 20 = 100000 \]
2. Next, divide this product by 100:
\[ SI = \frac{100000}{100} = 1000 \]
Thus, the simple interest for 2 years is Rs 1000.
Let us review why other options are incorrect:
- Option (A) Rs 500 is incorrect because it represents the simple interest for only 1 year instead of 2 years.
- Option (C) Rs 1500 is incorrect because it represents the interest for 3 years.
- Option (D) Rs 2000 is incorrect because it represents the interest for 4 years.

Step 4: Final Answer:
The simple interest is Rs 1000, which matches Option (B).