The difference between the compound interest on a sum, at a certain rate of interest, for the first and the second year is Rs. 800. What will be the difference if the rate of interest is increased by 150%?

Rs. 2000

Rs. 3000

Rs. 4000

Rs. 5000

Show Answer

Hi
Let Principal be P and rate of interest be R
Now Interest for 1st year will PR/100
Now interest for 2nd year will be :
PR/100 +P(R/100)^2
Subtracting we get P(R/100)^2=800
Now when R is increased by 150 percent so R becomes 2.5 times its original value and R^2 will become 6.25 times its value
so we get difference to be P (2.5R/100)^2 =800*6.25=5000

Let principle be P and Rate be R.
On 1st yr interest is = P*R/100
On 2nd year CI is = (P*R/100)+ P*R*R/(100*100)
Difference is P*R*R/(100*100) =800
Now since value of difference is directly proportional to square of rate thus when rate increase by 150% i.e 2.5 times difference increase by square of 2.5 ie 6.25 time or 6.25*800 ie 5000

5000 will be the answer