Question

If the rate of interest is reduced from $5\%$ p.a. to $3\frac{1}{2}\%$,find the decrease in a half-year's interest on $Rs.540$

Answer 1

Principal amount $\left(P\right)=Rs.540$

Time period $\left(T\right)=\frac{1}{2}$ years

Rate of interest $\left(R_1\right)=5\%$ p.a. and $R_2=3\frac{1}{2}\%=\frac{7}{2}\%$

Decrease in Interest after $\frac{1}{2}$ years $=\frac{(P\times (R_1-R_2)\times T}{100}$

$=\frac{540\times (5-\frac{7}{2})\times \frac{1}{2}}{100}$
$=\frac{540\times \frac{3}{2}\times \frac{1}{2}}{100}$
$=4.05$
Thus, there will be a decrease of $Rs.4.05$.