Question : A sum was invested on simple interest at a certain rate for 2 years. If the interest rate is increased by 4%, then the interest increases by Rs. 160. What is the sum (in Rs.) invested?
Option 1: 2000
Option 2: 3000
Option 3: 3500
Option 4: 4000
Correct Answer: 2000
Solution :
Given: Simple interest for 2 years at 4% per annum = Rs. 160
We know,
Simple interest, SI = $\frac{\text{Principal × Rate × Time}}{100}$
The increase in interest is due to an increase in the rate for two years.
Let the principal be P.
SI for 2 years at 4% = Rs. 160
⇒ $\frac{P \times 4 \times 2}{100} = 160$
$\therefore$ P = Rs. 2000
Hence, the correct answer is 2000.
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