Multiple choice

A certain sum of money amount to Rs.2200 at 5% interest, Rs.2320 at 8% interest in the same period of time. The period of time is:

  1. 5

  2. 2

  3. 4

  4. 3

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The difference in interest earned is 2320 - 2200 = 120. This difference is due to the difference in interest rates: 8% - 5% = 3%. So 3% of principal for 1 year equals 120. Therefore: P × 3/100 × T = 120. Since the amounts are at simple interest, we can write: P × 5/100 × T = 220 (interest at 5%) and P × 8/100 × T = 320 (interest at 8%). Subtracting: P × 3/100 × T = 100. The principal can be found as 2200/(1 + 5T/100) or we can directly solve: T = 4 years.