A specific amount of money is loaned out at a simple interest rate, resulting in ₹15,000 in 2 years and ₹20,000 in 4 years. The rate percentage per annum is:
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e 25%.
Amount after 2 years = ₹15,000
Amount after 4 years = ₹20,000
Difference = 20,000 − 15,000 = 5,000 (this is interest for 2 years)
So, simple interest for 2 years = 5,000
⇒ Simple interest for 1 year = 2,500
Amount after 2 years = Principal + SI for 2 years
⇒ 15,000 = P + 5,000
P = 10,000
SI for 1 year = 2,500 on principal 10,000
Rate = (SI × 100) / (P × Time) = (2500 × 100) / (10,000 × 1) = 25%