Rs 6500 becomes Rs 8840 at a certain rate of simple interest in 4 years. If the rate of interest were 2% more, what would the amount be at the end of 5 years?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs 10075
First find the rate from the given amount, then change the rate and work out the interest for 5 years.
Interest in 4 years \(=8840-6500=2340\)
Rate \(\displaystyle =\frac{2340\times100}{6500\times4}=9\%\)
New rate \(=9+2=11\%\)
Interest for 5 years \(\displaystyle =\frac{6500\times11\times5}{100}=3575\)
Amount \(=6500+3575=10075\)
The amount would be Rs 10075.
Why the other options are incorrect
Option (1) Rs 10725 — Incorrect. Rs 10725 would mean interest of Rs 4225 in 5 years, that is a rate of 13%, not 11%.
Option (2) Rs 9750 — Incorrect. Rs 9750 would mean interest of Rs 3250 in 5 years, that is a rate of 10%, not 11%.
Option (3) Rs 9425 — Incorrect. Rs 9425 would mean interest of Rs 2925 in 5 years, that is a rate of 9%, not 11%.