Question

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:
1. 9,120
2. 8,240
3. 16,480
4. 7,250

Answer 1

Correct Answer - Option 2 : 8,240

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.