What will be the simple interest on a sum of ₹2,000 for 4 years at a rate of 1 paisa per rupee per month?

Correct option is D

Given:

Principal (P) = ₹2,000

Time (T) = 4 years

Rate of interest (R) = 1 paisa per rupee per month

Formula Used:

Simple Interest (SI) = $$\frac{(P × R × T) }{100}$$​(when rate is per annum)

Solution:

Rate per month = 1 paisa per rupee =$$\frac{1}{100}$$​per rupee = 1% per month.

Rate per annum = 1% per month × 12 months = 12% per annum.

Now, calculate the simple interest using the formula:

SI = $$\frac{(P × R × T) }{100}$$​​

SI =$$\frac{(2000 × 12 ×4 ) }{100}$$​​

SI = (20 × 12 × 4)

SI = 960

The simple interest will be ₹960.