Question

If sum of money becomes 7/4 of itself in 3 years at certain rate of simple interest then find rate per annum 
1. 22% p.a
2. 25% p.a
3. 24% p.a
4. 20% p.a

Answer 1

Correct Answer - Option 2 : 25% p.a

Given:

Time = 3 years

Amount ∶ Principal = 7 ∶ 4 

Formula Used:

Interest = Amount – Principal

Simple interest = Principal × Interest Rate × Time /100

Calculation:

Amount/Principal = 7/4

So, Principal = 4x

And, Amount = 7x

Interest = Amount – Principal

⇒ 3x = 7x - 4x

Simple interest = Principal × Interest Rate × Time /100

⇒ 3x = 4x × R × 3/100

⇒ R = 25% p.a.

∴ The rate of interest is 25% p.a.