What sum (in ₹) will earn a simple interest of ₹600 in 2 years at 8% per year rate of interest?

Appeared in: DSSSB October 2024

Explanation

The question requires finding the principal amount given the simple interest, rate, and time.
The standard formula for simple interest is SI = (P × R × T) / 100.
To find the principal (P), the formula is rearranged to P = (SI × 100) / (R × T).
Substituting the given values: SI = ₹600, R = 8%, and T = 2 years.
Calculation: P = (600 × 100) / (8 × 2) = 60000 / 16 = ₹3750.

Option A: This value is incorrect. It may result from a calculation error, such as dividing by 32 instead of 16 (e.g., 60000 / 32 = 1875).
Option B: This value is significantly higher and does not correspond to the correct calculation using the simple interest formula.
Option C: This value is incorrect. It might be obtained if the product of Rate and Time in the denominator was incorrectly calculated as 12 instead of 16 (60000 / 12 = 5000).

Clinical Relevance

Nursing practice connection: This is primarily an exam-oriented knowledge point with limited direct bedside application, so retain Calculating the Principal amount using the Simple Interest formula as background academic context rather than a clinical decision trigger.
While not a direct clinical skill, understanding basic financial calculations like simple interest is part of the general aptitude required for nursing entrance exams.
This knowledge is also practical for personal financial planning, such as understanding loans or investments.
What if the interest was compounded annually? The calculation would be more complex, using the formula A = P(1 + R/n)^(nt), and the principal would need to be derived from the final amount. Simple interest provides a more straightforward calculation for basic scenarios.

How to Approach the Question

First, identify all the given values from the question: Simple Interest (SI = ₹600), Rate (R = 8%), and Time (T = 2 years).
Next, recall the standard formula for simple interest: SI = (P × R × T) / 100.
Recognize that the question asks for the 'sum', which is the Principal (P).
Rearrange the formula to solve for P: P = (SI × 100) / (R × T).
Substitute the known values into the rearranged formula and perform the calculation: P = (600 × 100) / (8 × 2).
Finally, solve the equation and compare the result with the given options to select the correct answer.

Concept Tested & Keywords

Concept Tested: Calculating the Principal amount using the Simple Interest formula.
Stem keywords: simple interest, sum, rate of interest, 2 years, 8% per year
Lead-in keywords: What sum

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Practise the full DSSSB October 2024

Attempt every question from this paper in a timed mock, then review the full solution for each one.