Test Index

Time Value of Money

Question : 2 of 99

Marks: +1, -0

\text{₹} 720

\text{₹} 1020

Solution:

Concept:

Simple interest: Amount = Principal + Interest, where interest is proportional to time.

Explanation:

Let principal be

P

and rate of interest per annum be

R\%

Amount after 2 years:

P + \frac{P \times R \times 2}{100} = 720

Amount after 7 years (2+5):

P + \frac{P \times R \times 7}{100} = 1020

Subtract the first equation from the second:

\frac{P \times R \times 5}{100} = 300

→

\frac{P \times R}{100} = 60

Substitute into the first equation:

P + 2 \times 60 = 720

→

P = 720 - 120 = 600

Answer:

\text{₹} 600

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