The question given below is a problem solving question in Simple Interest. An easy question. The task at hand is to compute the principal invested based on data about interest earned.
- $ 200
- $ 150
- $ 210
- $ 175
- Insufficient data
Explanatory AnswerVideo explanation will be added soon
Crux of solving this question lies in identifying the interest generated between years 2 and 5. Finding out that will help us figure out what is the interest generated year on year, and use that information in the formula to calculate the principal.
The sum grew to $240 at the end of 2 years.
At the end of another 3 years, the sum grew to $ 300.
i.e. in 3 years, the sum grew by $ 60. So, interest for 3 years = $60.
Therefore, interest earned each year = $ 20.
Sum at the end of 2 years = $ 240
Hence, in the first 2 years, interest earned = 2 * 20 = $ 40.
Therefore, principal = Sum at the end of 2 years - $40 = $ 240 - $ 40 = $ 200.
Choice A is the correct answer.