A sum of Rs. 12,500 amounts to Rs. 15,500 in 4 years at the rate of simple…

2023

A sum of Rs. 12,500 amounts to Rs. 15,500 in 4 years at the rate of simple interest. What is the rate of interest?

  1. A.

    6%

  2. B.

    6.5%

  3. C.

    7%

  4. D.

    8%

Attempted by 18 students.

Show answer & explanation

Correct answer: A

Step-by-Step Solution

To find the rate of interest, we first need to determine the total simple interest earned over the given period.

  1. Calculate Total Interest (SI):

    • Principal (P) = Rs. 12,500

    • Amount (A) = Rs. 15,500

    • Simple Interest = Amount - Principal

    • SI = 15,500 - 12,500 = Rs. 3,000

  2. Use the Rate Formula:

    • Time (T) = 4 years

    • Formula for Rate (R): R = (100 * SI) / (P * T)

    • R = (100 * 3000) / (12,500 * 4)

  3. Perform the Calculation:

    • R = 300,000 / 50,000

    • R = 6%

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