Question:
The simple interest and compounded interest (compounded annually) earned on a certain sum of money are 8,000 and 8,400 respectively. If the principal is 40,000 and the rate of interest is 10% per annum, then what is the duration of the investment?
The simple interest and compounded interest (compounded annually) earned on a certain sum of money are 8,000 and 8,400 respectively. If the principal is 40,000 and the rate of interest is 10% per annum, then what is the duration of the investment?
Updated On: Mar 5, 2025
- 1 year
- 1.5 year
- 2 year
- 2.5 year
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The Correct Option is C
Solution and Explanation
Step 1: Use the Simple Interest Formula
The formula for simple interest (SI) is:
\[ SI = \frac{P \times R \times T}{100} \]
Step 2: Substitute the Given Values
Given:
- Principal (P) = 40,000
- Rate of Interest (R) = 10%
- Simple Interest (SI) = 8,000
Substituting these values into the formula:
\[ 8000 = \frac{40000 \times 10 \times T}{100} \]
Step 3: Solve for T
Rearranging the equation:
\[ 8000 = 4000T \]
\[ T = \frac{8000}{4000} = 2 \]
Final Conclusion:
The duration of the investment is 2 years.
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