An investment earns 4 paisa per rupee invested. If, at the end of the year,…

Concept: Simple Interest (SI) is calculated using SI = (Principal × Rate × Time) / 100, where the Rate is the percentage of the principal earned as interest each year. An interest rate quoted as 'x paisa per rupee' is the same rate expressed differently — since 100 paise make one rupee, x paisa of interest per rupee invested equals a rate of x% per annum.

Application:

1. Convert the given rate: 4 paisa per rupee = Rs. 0.04 interest per Rs. 1 invested, which is a rate of (0.04 ÷ 1) × 100 = 4% per annum.

2. The time period is 'at the end of the year', so Time (T) = 1 year.

3. Substitute the values into the Simple Interest formula: 100 = (P × 4 × 1) / 100.

4. Solve for the Principal: P = (100 × 100) ÷ 4 = 2500.

Cross-check: Using the unitary method as an independent check: if an investment of Rs. 1 earns Rs. 0.04 interest, then to earn Rs. 100 interest the investment must be 100 ÷ 0.04 = Rs. 2500 — the same value confirms the answer.

Result: The investment is equal to Rs. 2500.