A sum of Rs.4,000 becomes Rs.4,960 in 4 year at sin1ple interest. If the rate of interest becomes 1.5 times of itself, then bow much this sum will become after 4 years?
Answer & explanation
Correct answer: option 1
Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
Amount = Principal + Interest
Simple interest in 4 years = 4960 - 4000 = 960
Now ,
960 = \(\frac{40000 × Rate × 4 }{100}\)
Rate of interest per year = \(\frac{960 × 100 }{4000×4}\)
= \(\frac{96 }{4×4}\)
= 6%
New rate = 1.5 × Old rate = 1.5 × 6 = 9%
New simple interest for 4 years = \(\frac{4000×9 × 4 }{100}\) = Rs. 1440
New amount after 4 years = 4000 + 1440 = Rs. 5440