Question

A sum of money plus its 4 years simple interest makes an amount of Rs. 1,000. If the interest isincreased by 20%, then money becomes Rs. 1,040 in the same time. Find out the principaland rate of interest.​

Answer 1

Step-by-step explanation:

Let P be prinpical and r be interest rate.

After 4 years,

Total = P (1 + r×t)

1000 = P (1 + 4r) ...(1)

After interest rate is increased by 20 %,

Total = P [1 + (r+20r/100)×t]

1040 = P [1 + (r+0.2r)×4]

1040 = P (1 + 4.8r) ...(2)

Dividing (2) by (1),

1040/ 1000 = P(1+4.8r) / P(1+4r)

26/25 = (1+4.8r) / (1+4r)

26 (1+4r) = 25 (1+4.8r)

26 + 104r = 25 + 120r

120r - 104r = 26 - 25

16r = 1

r = 1/16

r = 1/16 × 100%

r = 6.25 %

Now, principal is calculated as -

1000 = P (1 + 4×1/16)

1000 = P (1 + 1/4)

1000 = P × 5/4

P = 1000 × 4/5

P = 800 Rs

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