Multiple choice

A sum was invested on simple interest at a certain rate for 2 years. If the interest rate is increased by 4%, then the interest increases by Rs. 160. What is the sum (in Rs.) invested?

  1. 2,000

  2. 3,000

  3. 3,500

  4. 4,000
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A Correct answer
Explanation

Simple interest formula is I = P*R*T/100. The increase in interest is (P * (R+4) * 2 / 100) - (P * R * 2 / 100) = 160. This simplifies to P * 4 * 2 / 100 = 160, so P * 0.08 = 160. P = 160 / 0.08 = 2000.

AI explanation

If the interest rate increases by 4% for 2 years, the total increase is 8% of the principal. This 8% increase equals the interest increase of Rs. 160. Therefore, the principal sum is 160 divided by 0.08, which equals Rs. 2000.

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