Correct Answer - Option 4 : Rs. 1280

Given:

Amount = Rs. 1120

Principle = Rs. 800

Time (T) = 4 years

Concept:

Simple interest is the interest calculated on the principal portion of the loan or the original contribution to the saving account.

Formula Used:

Simple Interest = (P × R × T)/100

Calculation:

Simple interest = 1120 - 800 = Rs. 320

Simple Interest = (P × R × T)/100

⇒ 320 = (800 × R × 4)/(100)

⇒ R = 320/32 = 10%

New rate = 10 + 5 = 15%

Simple Interest = (800 × 15 × 4)/100 = 480

So, Amount = 800 + 480 = Rs. 1280

**∴ The new amount when rate is increased by 5% is Rs. 1280.**