How much simple interest will a sum of Rs. 4800 earn at \(10\frac{1}{2}\)% per annum in 2 years 3 months?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 1134
Simple interest is earned on the original sum only, every year the same amount, so \(\text{SI}=\displaystyle\frac{P\times R\times T}{100}\), with the rate as a per cent and the time in years. Both the rate and the time are mixed numbers here, so they are first written as fractions.
Rate as a fraction: \(10\frac{1}{2}\%=\displaystyle\frac{21}{2}\%\)
Time in years (3 months is a quarter of a year): \(2\frac{3}{12}=\displaystyle\frac{9}{4}\) years
Interest on Rs. 4800: \(\displaystyle\frac{4800\times\frac{21}{2}\times\frac{9}{4}}{100}=48\times\frac{189}{8}=6\times189=1134\)