Rs. 800 amounts to Rs. 920 in 3 years at simple interest. What would it amount to if the interest rate is raised by 3%?
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Answer: A. Rs. 992
Explanation
An initial principal of eight hundred amounts to nine twenty in three years under basic terms. Increasing the annual interest rate by three percent over a three year period adds extra interest earnings. Calculating this additional interest gives eight hundred times zero point zero three times three, which equals seventy two. Simple interest is calculated as a fixed percentage of the principal multiplied by the investment duration in years. Changes in interest rates affect total earnings linearly over the life of the financial agreement. Adding the newly generated interest increment to the original final amount yields the updated investment total.
Option B overestimates the final amount by miscalculating the interest increment generated by the rate hike. Option C represents an incorrect intermediate value that fails to include the full three year interest addition. Option D suggests an excessively high return not supported by the simple interest calculation.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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