A person took a loan at 5% per annum simple interest during the first year and with an increase of 0.5% simple interest every year from the second year onwards. After 4 years he paid ₹4600 as total interest to settle the loan completely. How much was the loan?

Correct option is A

Given:
Total Simple Interest = Rs. 4600
Formula Used:

Solution:
Interest rate during first year = 5%
Interest rate during second year = 5 + 0.5 = 5.5%
Interest rate during third year = 5.5+ 5= 6%
Interest rate during fourth year = 6+ 0.5= 6.5%
Let P be the amount that has to be taken on loan.

23P = 4600 × 100
P = 20000
The amount that has to be taken on loan = Rs. 20000
Information Booster:
1. Amount = Principal + Simple Interest