Understanding the Problem
To find the principal sum (the original amount of money), we will use the formula for calculating simple interest. The formula is:
Simple Interest (SI) = Principal (P) × Rate (R) × Time (T) / 100
Where:
- SI is the interest earned
- P is the principal amount
- R is the annual interest rate (in percentage)
- T is the time period (in years)
Given Information
- Interest (SI) = Rs. 15,600
- Rate (R) = 6.5% per annum
- Time (T) = 12 years
Calculating the Principal
1. Rearranging the Formula
We need to find the principal (P), so we rearrange the formula:
P = SI × 100 / (R × T)
2. Substituting the Values
Now, we substitute the known values into the formula:
P = 15,600 × 100 / (6.5 × 12)
3. Calculating the Denominator
First, calculate the denominator:
6.5 × 12 = 78
4. Final Calculation
Now, substitute back into the formula:
P = 15,600 × 100 / 78
P = 1,600,000 / 78
P = Rs. 20,512.82 (approximately)
Conclusion
The sum of money (the principal) is approximately Rs. 20,512.82. This amount is what you would have invested to earn Rs. 15,600 in interest over 12 years at an annual interest rate of 6.5%.