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.