Correct Answer - Option 1 : 5%

**Given**

Ratio of principal and amount is 4 : 5 at a certain time. If it becomes 5 : 7 after 3 years

**Concept used**

Rate = (interest × 100)/(Principal × time)

**Calculation**

Principal : Amount = 4 : 5

Principal be equal

Multiply the first ratio with 25 and second with 20

⇒ (4 : 5) × 25

⇒ (5 : 7) × 20

Principal : Amount = 100 : 125

Principal : Amount = 100 : 140

Difference in amount = 140 - 125

Difference in Amount = 15

3 year = 15

1 year = 5

Rate = (interest × 100) / Principal × time

Rate = \(\frac{{5\ \times\ 100}}{{100\ \times\ 1}}\)

Rate = 5%

**∴ The required simple rate of interest is 5%.**