A sum of Rs.12,000 was taken at simple interest at some rate. After four months, Rs.6,000 more was added and the total principal was charged at double the earlier rate of interest. At the end of the year, if the total interest was Rs.2,800, then what was the initial rate of interest?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e 10%
| Understanding | Application |
| We will use the concept of simple interest. |
We know that the formula of simple interest is, ⇒ (p × r × t) / 100 Where p, r & t are principal, rate of interest in annual terms & time in years respectively. When p is 12000 for 4 months the interest will be, ⇒ (12000 × r × 4 / 12) / 100 ⇒ 40r For the next 8 months, the extra amount of 6000 is added to 12000 and the rate of interest is doubled. ⇒ (18000 × 2r × 8 / 12) / 100 ⇒ 240r Total interest earned will be, ⇒ 40r + 240r = 2800 ⇒ 280r = 2800 ⇒ r = 10% |