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%