An investment earns 4 paisa per rupee invested. If at the end of the year, the interest earned by an investment is Rs. 100, then the investment is equal to:Options Rs. 2,000 Rs. 2,200 Rs. 1,000 Rs. 2,500 Rs. 4,000
Question
An investment earns 4 paisa per rupee invested. If at the end of the year, the interest earned by an investment is Rs. 100, then the investment is equal to:Options Rs. 2,000 Rs. 2,200 Rs. 1,000 Rs. 2,500 Rs. 4,000
Solution
The problem states that an investment earns 4 paisa per rupee invested. This means that for every rupee invested, you get 4 paisa back as interest.
1 Rupee = 100 Paisa
So, if 1 Rupee gives 4 Paisa, then the interest rate is 4/100 = 0.04 (or 4%).
The problem also states that the interest earned by the investment at the end of the year is Rs. 100.
We can use the formula for simple interest to find the principal amount (the original investment). The formula for simple interest is:
Interest = Principal x Rate x Time
We know the interest (Rs. 100), the rate (0.04), and the time (1 year), so we can plug these values into the formula and solve for the principal:
100 = Principal x 0.04 x 1
To solve for the principal, we divide both sides of the equation by 0.04:
Principal = 100 / 0.04 = Rs. 2,500
So, the original investment was Rs. 2,500.
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