Question

Rashmi borrowed a sum of ₹ 20,000 at the rate of 5% p.a for the first 2 years and 8% p.a for the next 5 years. How much interest she has to pay at the end of the 6th year?

• A. ₹ 8,400
• B. ₹ 8,000
• C. ₹ 8,600
• D. ₹ 7000

Answer 1

The correct option is A ₹ 8,400

Principal amount = ₹ 20,000
For the first two years, rate = 5%

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

where S.I = Simple interest
P = Principal
R = Rate of interest
T = Time period

$\Rightarrow S.I=\frac{20,000\times 5\times 2}{100}$

$\Rightarrow S.I=₹2,000$

For the next five years, rate = 8%
To find: The interest till 6th year.

So, time span for interest at 8%
= 6 - 2 = 4 years

$\Rightarrow S.I=\frac{20,000\times 8\times 4}{100}$

$\Rightarrow S.I=₹6,400$

Total interest Rashmi has to pay = ₹ 2,000 + ₹ 6,400
= ₹ 8,400