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Question : If the annual rate of simple interest increases from $11\%$ to $17 \frac{1}{2} \%$, then a person's yearly income increases by INR 1,071.20. The simple interest (in INR) on the same sum at 10% for 5 years is:

Option 1: 16,480

Option 2: 9,120

Option 3: 8,240

Option 4: 7,250


Team Careers360 18th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: 8,240


Solution : Difference between two rates $= 17\frac{1}{2}\% – 11\% = \frac{13}{2}\% = 6.5\%$
We know, Simple interest = $\frac{\text{Principal × Rate × Time}}{100}$
⇒ $1071.20=\frac{\text{Principal}×6.5×1}{100}$
$\therefore$ Principal = $\frac{107120}{6.5} = 16480$
Now, simple interest for 5 years at the rate of 10% per annum
⇒ Simple Interest $=\frac{16480 × 10 × 5}{100} =  8240$
Hence, the correct answer is INR 8,240.

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