Ramakant wants to earn Rs. 1,500 interest on his deposits. He plans to buy a…
2023
Ramakant wants to earn Rs. 1,500 interest on his deposits. He plans to buy a sack of grains with the interest. He puts Rs. 5,000 into his account that earns 2.5% per year simple interest. How long will he need to leave his money in the account to earn this interest that would help him buy the sack of grains?
- A.
8 years
- B.
10 years
- C.
12 years
- D.
14 years
Show answer & explanation
Correct answer: C
Concept: Simple interest is calculated using the formula I = (P x R x T) / 100, where P is the principal, R is the annual rate of interest, and T is the time in years. Under simple interest the interest earned is the same every year, because it is always computed on the original principal and not on any accumulated amount.
Application: Here the target interest I = Rs. 1,500, the principal P = Rs. 5,000, and the rate R = 2.5% per year. Substitute these into the formula and solve for T step by step:
Write the formula: I = (P x R x T) / 100.
Substitute the known values: 1500 = (5000 x 2.5 x T) / 100.
Simplify the constant part first: (5000 x 2.5) / 100 = 125, so the equation becomes 1500 = 125 x T.
Solve for T: T = 1500 / 125 = 12.
Cross-check: Substituting T = 12 back into the formula gives I = (5000 x 2.5 x 12) / 100 = 150000 / 100 = Rs. 1,500, which matches the interest Ramakant wants to earn.
So he needs to leave his money in the account for 12 years to earn Rs. 1,500 in simple interest.