Question : If the rate of simple interest in consecutive years is 4% and 5% respectively, then what will be the total amount payable on INR 25,000 in 2 years?
Option 1: INR 26,250
Option 2: INR 28,250
Option 3: INR 26,000
Option 4: INR 27,250
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Correct Answer: INR 27,250
Solution :
Given: The Rate of Simple Interest in consecutive years is 4% and 5% respectively.
Principal = INR 25,000
Simple interest = $\frac{\text{Principal × Rate × Time}}{100}$
Putting the values, we have,
Simple interest = $\frac{25000×4×1}{100}+\frac{25000×5×1}{100}$
= 1000 + 1250
= 2250
Total amount = 25000 + 2250 = 27250
Hence, the correct answer is INR 27,250.
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