A savings account opened 3 months ago now has a balance of Rs. 20,400. If the bank pays 8 percent p.a. Simple interest, how much money was deposited?
To find out how much money was deposited in the savings account, we need to use the Simple Interest formula:
Simple Interest (SI) = (Principal * Rate * Time) / 100
Where:
- Principal is the initial deposit amount
- Rate is the rate of interest per annum
- Time is the duration in years
We are given:
- Simple Interest (SI) = Rs. 20,400
- Rate of Interest = 8% p.a.
- Time = 3 months (which needs to be converted to years)
First, let's convert the time from months to years. Since there are 12 months in a year, we divide the number of months by 12:
Time in years = 3 months / 12 months/year = 0.25 years
Now let's substitute the given values into the formula and solve for the Principal:
20,400 = (Principal * 8 * 0.25) / 100
Simplifying the equation, we have:
20,400 = (2 * Principal) / 100
Multiplying both sides of the equation by 100, we get:
20,400 * 100 = 2 * Principal
2,040,000 = 2 * Principal
Dividing both sides of the equation by 2, we find:
Principal = 2,040,000 / 2 = Rs. 1,020,000
Therefore, the initial deposit in the savings account was Rs. 1,020,000.