A sum of money was invested at the rate of 7.5% simple interest per annuum for 4 years. If the investments were for 5 years, the interest earned would have been Rs. 375 more. What was the initial sum invested?

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RRB ALP Previous Paper 2 (Held On: 9 Aug 2018 Shift 2)
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  1. Rs. 4,500
  2. Rs. 5,000
  3. Rs. 3,750
  4. Rs. 4,750

Answer (Detailed Solution Below)

Option 2 : Rs. 5,000
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Interest earned for 5 years – Interest earned for 4 years = 375

Let the principal be Rs. P,

⇒ (P × 7.5 × 5) /100 – (P × 7.5 × 4) /100 = 375

⇒ (37.5 × P) /100 – (30 × P) /100 = 375

⇒ (7.5 × P) /100 = 375

∴ P = Rs. 5000
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