A sum invested at rate r% simple interest for 5 years yields ₹1,500 as interest. If the rate were increased by 2% p.a. (i.e. r+2% p.a.) for the same period, the interest would be ₹1,800. What was the original principal?
Show answer & explanation
Correct answer: B
Explanation
Given:
Time = 5 years
First simple interest = 1500
Second simple interest = 1800
Rate in the second case = r + 2
By the formula:
SI = (P × R × T) / 100
1500 = (P × r × 5) / 100
P × r = 30000 …(1)
1800 = (P × (r + 2) × 5) / 100
P(r + 2) = 36000 …(2)
(2) − (1)
P(r + 2) − Pr = 36000 − 30000
2P = 6000
P = 3000
Principal = Rs. 3000