A sum of ₹800 amounts to ₹920 in 3 years at simple interest. If the interest rate is increased by 3%, it would amount to how much?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹992
Simple interest grows in proportion to the rate, so first find the rate from the given amount, then work out the interest at the new rate.
The rate (interest ₹920 − ₹800 = ₹120 in 3 years):
\(\displaystyle\frac{800\times R\times3}{100}=120\)
\(24R=120\), so \(R=5\%\)
At the new rate, \(5\%+3\%=8\%\):
Interest \(=\displaystyle\frac{800\times8\times3}{100}=192\)
Amount \(=800+192=\) ₹992
Shortcut:
The extra 3% for 3 years adds \(800\times\displaystyle\frac{3\times3}{100}=\) ₹72 of interest
New amount \(=920+72=\) ₹992