A sum of money was invested at simple interest at a certain rate for 5 years. Had it been invested at a 5\% higher rate, it would have fetched 500 more. What was the principal amount?
- A. 2,000 ✓
- B. 1,800
- C. 1,600
- D. 1,200
Correct Answer: A. 2,000
Explanation
The extra interest of 500 is generated by the additional 5\% rate over 5 years. So, \frac{P \times 5 \times 5}{100} = 500 \implies P = \frac{500 \times 100}{25} = 2000.
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