Correct Answer - Option 1 : 3%

**Given**

Principal = Rs. 4900

Rate = 3%

Time = 1 year

**Formula used**

Simple interest = (p × r × t)/100

Where p, r and t are principal, rate and time respectively.

**Calculation**

Simple interest = (4900 × 3 × 1)/100

⇒ 147

Simple interest is Rs. 147 on Rs. 4900, but X charges interest in advance. It means he gave Rs. 4753 only to Y as a loan.

⇒ 147 = (4753 × r × 1)/100

⇒ (147 × 100)/4753 = r

⇒ 3.09% = r

⇒ 3% = r

**∴ Rate of interest is 3%**