Explanation:

- First, we calculate the original interest earned. The difference between the final amount (Rs11,900) and the principal (Rs8,500) is Rs3,400.

- This Rs3,400 interest is earned over 5 years, so the simple interest per annum is Rs3,400 ÷ 5 = Rs680.

- The annual rate of interest can be calculated using the formula: Interest = Principal × Rate × Time ÷ 100. Plugging in the numbers: Rs680 = Rs8,500 × Rate × 1 ÷ 100, we find that Rate = 8%.

- With a 3% increase, the new rate becomes 11% per annum.

- Calculate the new interest: (Rs8,500 × 11 × 5) ÷ 100 = Rs4,675.

- The increased amount after 5 years would be the principal plus new interest: Rs8,500 + Rs4,675 = Rs13,175.

- Correct option: Option 2, Rs13,175.