Multiple choice

A sum amount to Rs. 12400 in 3 years at simple interest. If the rate of interest was increased by 25% then the amount received in 3 years will be 13000 find the rate of interest?

  1. 6%

  2. 8%

  3. 10%

  4. 12%

  5. Data inadequate
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let P be principal and R be rate. Amount after 3 years at R%: A₁ = P(1 + 3R/100) = 12400. When rate increases by 25%, new rate = 1.25R: A₂ = P(1 + 3×1.25R/100) = 13000. Subtract equations: P(3×1.25R/100 - 3R/100) = 13000 - 12400 = 600. Simplify: P(3.75R - 3R)/100 = 600, so P×0.75R/100 = 600, thus P×R = 600×100/0.75 = 80000. From first equation: P + 3PR/100 = 12400, so P + 3×80000/100 = 12400, so P + 2400 = 12400, thus P = 10000. Then R = 80000/10000 = 8%. Therefore, the original rate is 8%.

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