A man borrows a sum of Rs.12,000 which amounts to Rs.13,200 in 2 years on simple interest. What would have been the amount if the rate of interest was doubled?
Answer & explanation
Correct answer: option 2
Simple interest of 2 years = 13200 - 12000 = 1200
Simple interest of 1 years = \(\frac{1200 }{2 }\) = 600
We know,
Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
600 = \(\frac{12000 ×Rate × 1 }{100}\)
Rate = \(\frac{6000 ×100 }{12000}\) = 5%
If rate is doubled i.e. New rate = 5% × 2 = 10%
New simple interest = \(\frac{12000 ×10 × 2 }{100}\) = 2400
Amount = Principal + SI
New Amount = 12000 + 2400 = 14400