Simple interest on a sum is one-fourth of the sum and the interest rate percentage per annum is 4 times the number of years. If the interest increases by 5%, then what will be the simple interest on 5000 for 3 years?
Answer & explanation
Correct answer: option 3
ATQ S.I. = \(\frac{1}{4}\) of Principal
Therefore, Total Interest (r t) = \(\frac{1}{4}\) × 100 = 25%
Now, r = 4t ⇒ t = \(\frac{r}{4}\)
Total rate of Interest = rate p.a. × time
⇒ 25% = r × \(\frac{r}{4}\)
⇒ r = 10%
Now, increased rate of interest by 5% = 15%
S.I. = \(\frac{5000 × 3 × 15 }{100}\) = 750 × 3 = 2250