What principal would amount to ₹21,420 in 2 years at the rate of 9.5% p.a. simple interest?

Question

Accepted Answer

Given:
Amount (A) = ₹21,420
Rate of interest (R) = 9.5% per annum
Time (T) = 2 years

We know the formula for simple interest:
SI = (P × R × T) / 100

Also, Amount A = Principal P + Simple Interest SI
=> A = P + (P × R × T) / 100
=> A = P (1 + (R × T) / 100)

Substitute the values:
21,420 = P × (1 + (9.5 × 2) / 100)
21,420 = P × (1 + 19 / 100)
21,420 = P × (1 + 0.19)
21,420 = P × 1.19

Therefore,
P = 21,420 / 1.19
P = 18,000

Hence, the principal amount is ₹18,000.

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