Question

The simple interest on a sum of money is 4/25 of the sum. If the number of years is numerically 1/4^th of the rate of interest per annum. Find the rate of interest for that amount is lent?
1. 6% p.a.
2. 8.5% p.a.
3. 8% p.a.
4. 7% p.a.

Answer 1

Correct Answer - Option 3 : 8% p.a.

Given:

Simple interest = 4/25 of sum

Formula Used:

Simple interest = Principal × Rate of interest × Number of years/100 

Calculation:

Let assume that Simple interest = 4x

Principal = 25x

Rate of interest = R

Number of years = R/4

Simple interest = Principal × Rate of interest × Number of years/100

⇒ 4x = 25x × (R/100) × R/4

⇒ R² = 64

⇒ R = 8% p.a.

∴ The rate of interest is 8% p.a.

The correct option is 3 i.e. 8% p.a.