Multiple choice

SBI lent 1 lakh to farmer Kishan Singh at 6% per annum, at simple interest for a period of 10 years. Meanwhile, the bank offered a discount in the rate of interest, according to the Govt. policy for farmers. Thus, the rate of interest is decreased to 4% p.a. In this way, Kishan Singh had to pay a total amount 1.48 lakh. After how many years did Kishan Singh got the discount in the rate of interest?

  1. 2 years

  2. 3 years

  3. 4 years

  4. 5 years
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Principal = 1,00,000. Interest = 48,000. Let t be the time at 6% and (10-t) be the time at 4%. (100000 * 0.06 * t) + (100000 * 0.04 * (10-t)) = 48000. 6000t + 40000 - 4000t = 48000. 2000t = 8000. t = 4 years.

AI explanation

The total interest paid is Rs. 1,48,000 minus Rs. 1,00,000, which equals Rs. 48,000 over the 10 year period. If the loan were at 6% for the entire 10 years, the interest would be 6% of 1,00,000 times 10, equaling Rs. 60,000. The interest savings due to the discount is Rs. 60,000 minus Rs. 48,000, which equals Rs. 12,000. Since the rate drop is 2%, the annual savings is 2% of Rs. 1,00,000, equaling Rs. 2,000 per year. Dividing the total savings of Rs. 12,000 by the annual savings of Rs. 2,000 shows the discount was applied for 6 years, meaning the rate decreased after 4 years.

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