type 2 increase or decrease in interest rate Section-Wise Topic Notes With Detailed Explanation And Example Questions

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The following question based on simple interest topic of quantitative aptitude

Questions : A sum of Rs. 800 becomes Rs. 956 in 3 years at a certain rate of simple interest. If the rate of interest is increased by 4%, what amount will the same sum become in 3 years ?

(a) RS. 1042

(b) Rs. 1025

(c) Rs. 1024

(d) Rs. 1052

The correct answers to the above question in:

Answer: (d)

Using Rule 1,

S.I. = 956 - 800 = Rs. 156

Rate = ${\text"S.I." × 100}/\text" Principal × Time"$

= ${156 × 100}/{800 × 3}$ = 6.5%

New rate = (6.5 + 4)% = 10.5%

S.I. = ${\text"Principal × Time × Rate"/100$

= ${800 × 3 × 10.5}/100$ = Rs. 252

Amount = Rs.(800 + 252) = Rs.1052

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Read more increase or decrease in interest rate Based Quantitative Aptitude Questions and Answers

Question : 1

A sum of Rs.400 amounts to Rs.480 in 4 years. What will it amount to if the rate of interest is increased by 2%?

a) Rs.560

b) Rs.484

c) None of these

d) Rs.512

Answer: (d)

Using Rule 1
Simple Interest (S.I.)= ${\text"Principal × Rate × Time"/100$ or
S.I. = ${\text"P × R × T"/100$
P = ${\text"S.I." × 100}/\text"R × T"$, R = ${\text"S.I." × 100}/\text"P × T"$, T = ${\text"S.I." × 100}/\text"P × R"$
A = P + S.I. or S.I. = A - P

Interest = Rs.(480–400) = Rs.80

80 = ${400 × r × 4}/100$ ⇒ r = 5

Now, r = 7% (2% increase)

S.I. = ${400 × 7 × 4}/100$ = 112

Amount = Rs.(400+112) = Rs.512

Question : 2

The rate of simple interest per annum of bank being decreased from 5% to 3$1/2$%, the annual income of a person from interest was less by Rs. 105. The sum deposited at the bank was

a) Rs.7,200

b) Rs.6,000

c) Rs.7,000

d) Rs.6,800

Answer: (c)

Using Rule 1,

Amount deposited in bank = Rs.x (let)

Difference of rates

= 5 - $7/2 = 3/2%$ per annum

S.I. = ${\text"Principal × Time × Rate"/100$

${x × 1 × 3}/{100 × 2}$ = 105

$x = {105 × 200}/3$ = Rs.7000

Question : 3

A man loses Rs.55.50 yearly when the annual rate of interest falls from 11.5% to 10%. His capital (in rupees) is

a) 7400

b) 3700

c) 11100

d) 8325

Answer: (b)

Using Rule 1,

Let his capital be x.

According to the question,

${x × 11.5}/100 - {x × 10}/100$ = 55.50

or (11.5 - 10)x = 5550

or 1.5x = 5550

or $x = 5550/{1.5}$ = Rs.3700

Question : 4

A sum of money was invested at a certain rate of simple interest for 2 years . Had it been invested at 1% higher rate, it would have fetched Rs.24 more interest. The sum of money is :

a) Rs.1050

b) Rs.1200

c) Rs.9600

d) Rs.1000

Answer: (b)

${P × 1 × 2}/100 = 24$

P = $2400/2$ = Rs.1200

Using Rule 13,

$P_1 = P, R_1 = R, T_1$ = 2.

$P_2 = P, R_2 = R + 1, T_2$ = 2

S.I.= Rs. 24

24 = ${P(R +1)2 - PR2}/100$

2400 = 2PR + 2P - 2PR

P = Rs.1200

Question : 5

A sum was lent at simple interest at a certain rate for 2 years. Had it been lent at 3% higher rate, it would have fetched Rs.300 more. The original sum of money was :

a) Rs.6000

b) Rs.5000

c) Rs.4000

d) Rs.7000

Answer: (b)

If the principal be x, then

${x × 3 × 2}/100 = 300$

$x = {300 × 100}/{3 × 2}$ = Rs.5000

Using Rule 13.

$P_1 = P, R_1 = R, T_1$ = 2.

$P_2 = P, R_2 = R + 3, T_2$ = 2.

S.I.= Rs.300

300 = ${P × (R + 3) × 2 - PR2}/100$

300 = ${6P}/100$ = Rs.5000

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GET simple interest PRACTICE TEST EXERCISES

type 1 basic simple interest using formula

type 2 increase or decrease in interest rate

type 3 money multiples in ‘n’ years

type 4 difference & equality of si rate & years

type 5 si on ‘n’ years & ‘x/y ‘of sum

type 6 si with ratios
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