A sum of ₹ 80,000 is invested at 6% p.a. at simple interest for the first year, then 8% p.a. for the next 2 years (still simple interest). What is the total interest earned over the 3 year period?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹ 17,600
Simple interest is worked out on the same principal every year, \(\text{SI}=\frac{P\times R\times T}{100}\), so the interest for each rate is found separately and the two are added. The interest earned is not added to the principal, which stays ₹ 80,000 for all three years.
First year at 6%: \(\displaystyle\frac{80000\times6\times1}{100}=4800\)
Next 2 years at 8%: \(\displaystyle\frac{80000\times8\times2}{100}=12800\)
Total interest \(=4800+12800=\) ₹ 17,600