A person invested ₹12,000 on simple interest for 7 years to obtain a total amount of ₹20,400 on a certain annual rate of interest. What was the rate of interest to obtain the above amount?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e 10%.
A = P + S.I.
⇒ 20400 = 12000 + S.I.
⇒ S.I. = 20400 - 12000
⇒ S.I. = Rs. 8400
We know that
⇒ S.I. = (P × R × T)/100
here, S.I. = Simple Interest, P = Principal, R = Rate, A = Amount and T = Time
⇒ 8400 = (12000 × R × 7)/100
⇒ R = (8400 × 100)/(12000 × 7)
⇒ R = 10%