A nurse takes a personal loan of ₹10,000 at an annual simple interest rate of 5%. How much total amount will she pay back after 3 years?

1. A

   ₹10,500

2. B

   ₹11,000

3. C

   ₹11,500

4. D

   ₹12,000

Appeared in: RML 2023

Explanation

• The question requires calculating the total amount for a loan using simple interest.
• The formula for Simple Interest (SI) is Principal (P) × Rate (R) × Time (T) / 100.
• Substituting the values: SI = (10,000 × 5 × 3) / 100 = ₹1,500.
• The total amount to be paid back is the Principal plus the Simple Interest.
• Total Amount = ₹10,000 (Principal) + ₹1,500 (Interest) = ₹11,500.

Why Other Options Were Wrong

• Option A: This amount (₹10,500) only accounts for one year of interest (₹500), not the full three-year period.
• Option B: This amount (₹11,000) incorrectly calculates the interest for only two years (₹1,000), instead of the specified three years.
• Option D: This amount (₹12,000) overestimates the interest by calculating it for four years (₹2,000), which is longer than the loan term.

Related Visual

Clinical Relevance

• Nursing practice connection: Safe nursing care depends on performing Calculation of Simple Interest and Total Amount in the correct sequence, documenting the action clearly, and monitoring for the expected response.
• Understanding basic financial concepts like simple interest is a crucial life skill for personal financial management, including managing loans, savings, and investments.
• What if? - If the interest was compounded annually instead of simple, the amount would be higher because interest would be calculated on the accumulating interest each year. The formula would be A = P(1 + R/n)^(nt), resulting in a total amount of ₹11,576.25.

How to Approach the Question

• First, identify the key values given in the problem: Principal (P = ₹10,000), Rate of Interest (R = 5%), and Time (T = 3 years).
• Recall the standard formula for calculating Simple Interest: SI = (P × R × T) / 100.
• Substitute the identified values into the formula to calculate the total interest accrued over the 3-year period.
• Remember that the question asks for the 'total amount' to be paid back, not just the interest. This means you must add the calculated interest to the original principal amount.
• Finally, compare your calculated total amount with the given options to select the correct one.

Concept Tested & Keywords

• Concept Tested: Calculation of Simple Interest and Total Amount
• Stem keywords: personal loan, ₹10,000, simple interest, 5%, 3 years
• Lead-in keywords: How much total amount

Question ID

QYzDUyEzKxj8GhGirkF3M8

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