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Retiring partner loan is ₹110000 and interest rate is 7 percent per annum. What is interest for one year?

Answer and explanation

Correct answer: ₹7700

The direct answer is A: the one-year interest is ₹7,700. Interest means the charge for using money. Use the formula Interest = Principal × Rate × Time. Here, principal is ₹110,000, annual rate is 7 percent, and time is one year. Therefore, interest = ₹110,000 × 7/100 × 1 = ₹7,700. Option A is correct. Option B, ₹7,000, results from using the wrong base or rate and does not follow the stated calculation. Option C, ₹11,000, is 10 percent of the principal, not 7 percent. Option D, ₹117,700, is principal plus interest, not interest alone; ₹110,000 + ₹7,700 is the amount including principal. Since the period is exactly one year, no month conversion is needed. Memory cue: first calculate interest, then add it to principal only if the question asks for the total amount.

Related tags

Partners-LoanInterestNumerical

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