Correct Answer - Option 3 : 2.5%
GIVEN:
Ratio of principal and simple interest for 2 year is 20 : 1
FORMULA USED:
Simple Interest = PRT ÷ 100
Where, P = principle, R = Rate of interest, T = time period
CALCULATION:
SI/P = RT/100
⇒ 1/20 = (R × 2)/100
⇒ R = 2.5
Hence,
Rate of interest = 2.5%