If the annual rate of simple interest increases from 11% to \(17 \frac{1}{2}\)%, then a person's yearly income increases by Rs. 1,071.20. The simple interest (in Rs.) on the same sum at 10% for 5 years is:
- AOption (a)
9,120
- BOption (b)
8,240
- COption (c)
16,480
- DOption (d)
7,250
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Correct answer
8,240
Why this answer is correct
Given:
Rate of interest changes from 11% to \(17\frac{1}{2}\)%
Due to change of rate of interest yearly income increases by Rs. 1071.20
Formula used:
Simple Interest = (P × R × T)/100
Where,
P → Principal
R → Rate
T → Time
Calculation:
Difference between two interest rates = \(17\frac{1}{2}\)% – 11% = (13/2)%
⇒ Increased income = (P × R × T)/100
⇒ 1071.20 = (P × (13/2) × 1)/100
⇒ (107120 × 2)/13 = P
⇒ P = 16480
Simple Interest = (P × R × T)/100
⇒ (16480 × 10 × 5)/100
⇒ 1648 × 5
⇒ 8240 Rs.
∴ The simple interest for five years at 10% is 8240 Rs.
Alternate Method Difference between two interest rates = \(17\frac{1}{2}\)% – 11% = (13/2)%
Increased income = (P × R × T)/100
⇒ 1071.20 = (P × (13/2) × 1)/100
⇒ P = 16480
Simple Interest = (P × R × T)/100
⇒ (16480 × 10 × 5)/100
⇒ 8240
