A person took a loan at 5%p.a simple interest during the first year and with an increase of 0.5% simple interest every year from second year onwards. After 4 years, he paid Rs. 4600 as a total interest to settle the loan completely. How much was the loan?(1 Point)Rs. 18000Rs. 20000Rs. 19000Rs. 21000

To solve this problem, we need to understand how simple interest works. Simple interest is calculated annually on the original amount of the loan. The formula for simple interest is I = PRT, where I is the interest, P is the principal amount (the original loan), R is the rate of interest, and T is the time in years.

In this case, the interest rate increases by 0.5% each year. So, for the first year, the rate is 5%, for the second year, it's 5.5%, for the third year, it's 6%, and for the fourth year, it's 6.5%.

The total interest paid after 4 years is Rs. 4600. So, we can set up the following equations based on the information given:

For the first year: I1 = P * 5/100 * 1 For the second year: I2 = P * 5.5/100 * 1 For the third year: I3 = P * 6/100 * 1 For the fourth year: I4 = P * 6.5/100 * 1

The total interest paid is the sum of the interests for each year, so we have:

4600 = I1 + I2 + I3 + I4 4600 = P * 5/100 * 1 + P * 5.5/100 * 1 + P * 6/100 * 1 + P * 6.5/100 * 1 4600 = P * (5/100 + 5.5/100 + 6/100 + 6.5/100) 4600 = P * 23/100

Solving for P, we get:

P = 4600 / (23/100) = Rs. 20000

So, the original loan amount was Rs. 20000.