₹800 becomes ₹956 in 3 years at a certain rate of simple interest. If the rate of interest is increased by 4%, what will ₹800 amount to in 3 years:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹1,052
Simple interest is \(\text{SI}=\frac{P\times R\times T}{100}\); first find the rate from the given growth, then use the new rate.
The present rate:
SI in 3 years = 956 − 800 = ₹156
\(R=\displaystyle\frac{156\times100}{800\times3}=6.5\%\)
At the new rate, 6.5% + 4% = 10.5%:
SI \(=\displaystyle\frac{800\times10.5\times3}{100}=\) ₹252
Amount = 800 + 252 = ₹1,052
Shortcut: The extra 4% alone adds a fixed sum on top of the old amount:
Extra interest \(=\displaystyle\frac{800\times4\times3}{100}=\) ₹96
New amount = 956 + 96 = ₹1,052