The present worth of Rs 2040 is due 4 years hence reckoning interest at 5% per annum will be Rs 2448.
What is simple interest?
Simple interest is a way to figure out how much interest will be charged on a sum of money at a specific rate and for a specific duration of time.
Simple interest has a constant principal amount, as opposed to compound interest, which multiplies the interest from the principal of previous years to calculate the interest of the subsequent year.
Given,
Principle amount = Rs 2040
Time period = 4 years
Rate of interest = 5 %
Simple interest = PRT/100
Simple interest = 2040 × 5 × 4/100 = Rs408
Present worth = Principle amount + Interest
Present worth = 2040 + 408
Present worth = Rs 2448.
Hence present worth of the amount of Rs2040 in 4 years will be Rs 2448.
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