Multiple choice

Rs. 2000 amount to Rs. 2600 in 5 years at simple interest. If the interest rate were increased by 3%, it would amount to

  1. Rs. 2900

  2. Rs. 3200

  3. Rs. 3600

  4. Rs. 3700
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A Correct answer
Explanation

Interest = 2600 - 2000 = 600. SI = P*R*T/100 -> 600 = 2000*R*5/100 -> R = 6%. New rate = 6 + 3 = 9%. New interest = 2000*9*5/100 = 900. New amount = 2000 + 900 = 2900.

AI explanation

The interest earned is calculated by subtracting the principal from the total amount, so Rs. 2600 minus Rs. 2000 equals Rs. 600. Using the simple interest formula, the annual interest rate is (600 * 100) / (2000 * 5), which is 6%. If the rate increases by 3%, the new rate becomes 9%, generating an annual interest of 9% of Rs. 2000, which is Rs. 180 per year. Over 5 years, this new interest amounts to Rs. 900, making the total new amount Rs. 2000 plus Rs. 900, which equals Rs. 2900.

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