Multiple choice

On 1.1.05 X draws a bill on Y for Rs. 20,000 for 3 months. At maturity Y requests X to renew the bill for 2 months at 12% p.a interest. Amount of interest will be _________.

  1. Rs. 400

  2. Rs. 300

  3. Rs. 360

  4. Rs. 380
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A Correct answer
Explanation

Interest = Principal * Rate * Time. The bill is renewed for 2 months at 12% p.a. Interest = 20,000 * 0.12 * (2/12) = 20,000 * 0.02 = 400.

AI explanation

For the renewed bill, the interest is calculated on the original principal amount of Rs. 20,000 for the new renewal period of 2 months. Using the simple interest formula, Interest = (Principal * Rate * Time) / 100, we get Interest = (20000 * 12 * 2) / (100 * 12). This calculation results in an interest amount of Rs. 400.

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