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Pillu has Rs. 7500. She gives this money to Chillu on simple interest and after 4 years received the double amount. If the rate of interest is decreased by 20%, then in how many years this amount will be doubled?

Pillu has Rs. 7500. She gives this money to Chillu on simple interest and after 4 years received the double amount. If the rate of interest is decreased by 20%, then in how many years this amount will be doubled? Correct Answer 5 years

Given:

The total amount that Pillu have = Rs. 7500

On simple interest and after 4 years Pillu received the double amount.

Concept:

If someone received a doubled amount after some time that means interest is always equal to the principal.

Formula used:

Time = (Interest × 100)/( Principal × Rate)

Rate of interest = (Interest × 100)/( Principal × Time)

Calculation:

The total amount that Pillu have = Rs. 7500

On simple interest and after 4 years Pillu received the double amount.

Then after 4 years total amount = 7500 × 2 = Rs. 15000

So, simple interest = 15000 – 7500 = Rs. 7500

Then by formula

Rate of interest = (interest × 100)/( Principal × time)

⇒ Rate = (7500 × 100)/(7500 × 4)

⇒ Rate = 100/4 = 25%

Now the rate of interest is decreased by 20%,

Then rate of interest = 25 × (80/100) = 20%

Now to find time in which the amount will be doubled

Interest = Rs. 7500

By formula,

Time = (Interest × 100)/( Principal × Rate)

⇒ Time = (7500 × 100)/(7500 × 20) = 5 years

∴ If the rate of interest is decreased by 20%, then in 5 years this amount will be doubled

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