Question

A sum of rs.600 amounts to rs. 720 in 4 years .What will it amount to if the rate of interest is increased by 2%

Answer 1

Interest = Amount - Principal
=720-600=120rs.
Simple Interest = P*R*T/100
120=600*4*R/100=24R
R=5%p.a.
New Interest= 600*7*4/100=168
Amount=Interest + Principal=600+168
=Rs.768

Answer 2

New amount after 2% increase in rate of interest is Rs. 768

Solution:

The principal of the transaction is Rs. 600 and the amount is considered as Rs. 720. Now the time required for the amount to manifest is 4 years.

Now the questions asks us what will the amount if the interest is increased by 2%.

Let the interest be R%, so to find the rate of interest we use the formula $\bold{S.I.= \frac{P R T}{100}}$

Simple interest of old transaction = Amount – Principal = 720 – 600 = 120

$\begin{array}{l}{120=\frac{600 \times R \times 4}{100}} \\ \\{\frac{120 \times 100}{2400}=R \%}\end{array}$

Therefore, the rate of interest of the old transaction is 5%. Hence, as we know that in the new transaction the interest rate is increase by 2%, So the new rate of interest be (5 + 2) = 7%.

The new S.I. will be:

New S.I.=$\frac{P R T}{100}$

New S.I= $\frac{600 \times 7 \times 4}{100}$=168  

New Amount=Principal+ New S.I  

New Amount =600+ 168  

New Amount =Rs.768