Multiple choice

A sum of money amounts to Rs. 20,800 in 5 years and Rs. 22,720 in 7 years. Find the principal and rate of interest.

  1. Rs. 5000, 6%

  2. Rs. 16,000, 6%

  3. Rs. 80,000, 8%

  4. Rs. 10,000, 10%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest for 2 years (7-5) = 22720 - 20800 = 1920. Interest for 1 year = 960. Interest for 5 years = 4800. Principal = 20800 - 4800 = 16000. Rate = (Interest * 100) / (P * T) = (960 * 100) / (16000 * 1) = 6%.

AI explanation

The difference in amounts for 2 years is Rs. 22720 minus Rs. 20800, which equals Rs. 1920; this means the simple interest for one year is Rs. 960. The simple interest for 5 years is 5 times 960, which is Rs. 4800, so the principal is Rs. 20800 minus Rs. 4800, giving Rs. 16000. Using the simple interest formula to find the rate, R equals (960 x 100) divided by (16000 x 1), which is 6%. The sum lent out is Rs. 16000 and the rate of interest is 6 percent.

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