Simple Interest Principal Calculation

This question requires calculating the initial amount of money (Principal Sum, P) invested or borrowed, given the Simple Interest (SI) earned, the Rate of Interest (R), and the Time Period (T).

Given Interest Parameters

• Simple Interest (SI) = ₹700
• Time Period (T) = 2 years
• Rate of Interest (R) = 8% per annum

Simple Interest Formula Application

The fundamental formula for Simple Interest is:

$SI = \frac{P \times R \times T}{100}$

To determine the Principal Sum (P), we rearrange this formula:

$P = \frac{SI \times 100}{R \times T}$

Principal Sum Calculation Steps

Substitute the provided values into the rearranged formula:

$P = \frac{700 \times 100}{8 \times 2}$

First, calculate the numerator and the denominator:

$P = \frac{70000}{16}$

Now, perform the division:

$P = 4375$

Resulting Principal Amount

Therefore, the sum of money that will yield ₹700 as simple interest in 2 years at 8% per annum is ₹4375.