What sum (in ₹) will earn a simple interest of ₹1,320 in 3 years at 20% per year rate of interest?

Question

What sum (in ₹) will earn a simple interest of ₹1,320 in 3 years at 20% per year rate of interest?

1. A. 4,400
2. B. 2,200 (Correct answer)
3. C. 1,100
4. D. 792

Correct Answer

Option B — 2,200

Detailed Solution & Explanation

The correct answer is ₹2,200.

Shortcut Trick

• At 20% per year for 3 years, simple interest totals 60% of the principal.
• So $0.60 \times P = 1320 \Rightarrow P = \dfrac{1320}{0.6} = \textbf{₹2,200}$.

Alternate Method

• $SI = \dfrac{P \times R \times T}{100}$
• $1320 = \dfrac{P \times 20 \times 3}{100} = \dfrac{60P}{100} = 0.6P$
• $P = \dfrac{1320}{0.6} = \textbf{2200}$

Additional Information

• Simple interest is linear — the rate applies to the original principal every year, so $R\%$ for $T$ years is simply $RT\%$ in total. Converting to a single percentage first, as the shortcut does, avoids the fraction entirely.
• Compound interest would give more: $2200 \times (1.2)^3 - 2200 = ₹1,602.60$ against ₹1,320, because interest earns interest.
• Under simple interest a sum doubles when $RT = 100$ and triples when $RT = 200$ — worth carrying, as questions often ask for the time to double.