Multiple choice

Mr. Mittal finds that an increase in the rate of interest from $4 \displaystyle \frac{7}{8}\%$ to $5 \displaystyle \frac{1}{8}\%$ per annum increases his yearly income by Rs. $250$. His investment is

  1. Rs. $1,00,000$
  2. Rs. $1,20,000$
  3. Rs. $1,50,000$
  4. Rs. $2,00,000$
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A Correct answer
Explanation

Difference in rate = 5 1/8% - 4 7/8% = 41/8% - 39/8% = 2/8% = 1/4%. If 0.25% of Investment = 250, then Investment = 250 / 0.0025 = 100000.

AI explanation

The increase in the rate of interest is 5 and one-eighth percent minus 4 and seven-eighths percent, which equals one-quarter percent. This one-quarter percent increase on the principal generates the extra income of 250, so we write 250 equals Principal times 0.25 divided by 100. Solving this gives Principal equals 250 times 400, resulting in an investment of 100000.

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