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%.