A certain sum was invested on simple interest. The amount to which it had grown in five years was 5/4 times the amount to which it had grown in three years. The percentage rate of interest was:
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 20%.
Suppose the sum is 100 and the rate of interest is R
Simple Interest = Principal × Rate × Time/100
Amount in 5 years = 100 + 500R/100 = 100 + 5R
Amount after 3 years = 100 + 300R/100 = 100 + 3R
As given:
100 + 5R = 5/4(100 + 3R)
⇒ 400 + 20R = 500 + 15R
⇒ 5R = 100
⇒ R = 20
Hence, rate of interest = 20%