Multiple choice

M borrows some money for 1 year at a certain rate of simple interest; but the rate increases by 2%, which increases the simple interest by Rs. 120. Find the principal amount.

  1. Rs. 4000

  2. Rs. 5000

  3. Rs. 6000

  4. Rs. 7000

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

Simple interest formula: I = PRT/100. The increase in interest is due to the rate increase: 120 = P * (2%) * 1 year. P = 120 / 0.02 = 6000.

AI explanation

Using the simple interest formula, the extra interest incurred due to the increased rate is calculated as Principal multiplied by extra Rate multiplied by Time divided by 100. We substitute the given values to get 120 equals Principal multiplied by 2 multiplied by 1 divided by 100. Solving this equation, the principal amount is Rs. 6000.

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