Question

A sum of money was invested at the rate of 7.5% simple interest per annuum for 4 years. If the investments were for 5 years, the interest earned would have been Rs. 375 more. What was the initial sum invested?

• A. Rs. 4,500
• B. Rs. 5,000
• C. Rs. 3,750
• D. Rs. 4,750

Answer 1

Answer:

B. Rs. 5,000

Solution: Interest earned for 5 years – Interest earned for 4 years = 375 Let the principal be Rs. P, ⇒ (P × 7.5 × 5) /100 – (P × 7.5 × 4) /100 = 375 ⇒ (37.5 × P) /100 – (30 × P) /100 = 375 ⇒ (7.5 × P) /100 = 375 ∴ P = Rs. 5000