Question

A sum invested at 5% simple interest per annum grows to ₹806 in 6 years If the amount remains the same how much will it grow at a 12% simple interest rate in 5 years?

• A. ₹992
• B. ₹1000
• C. ₹1100
• D. ₹850

Answer 1

Answer:

A. ₹992

Find the principal

Using simple interest:
$A = P\left(1 + \frac{RT}{100}\right)$

Given:

• (A = 806)

• (R = 5%)

• (T = 6)

$806 = P\left(1 + \frac{5 \times 6}{100}\right)$
= P(1 + 0.30)
= 1.3P
$P = \frac{806}{1.3} = 620$

Find new amount at 12% for 5 years

$A = 620\left(1 + \frac{12 \times 5}{100}\right)$
= 620(1 + 0.60)
$= 620 \times 1.6$
= 992