Multiple choice

Kruti took some loan at $6\%$ per annum simple interest during the first year with an increase of $0.5\%$ for each year. After $4$ years she paid Rs. $3375$ as interest. How much was the loan ?

  1. Rs. $12500$
  2. Rs. $33250$
  3. Rs. $15800$

  4. Cannot be determined
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Simple interest for 4 years with increasing rates: Year 1 = 6%, Year 2 = 6.5%, Year 3 = 7%, Year 4 = 7.5%. Total interest rate = 6 + 6.5 + 7 + 7.5 = 27%. If P is the principal, 0.27 * P = 3375, so P = 3375 / 0.27 = 12500.

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