A sum becomes 8,400 in 3 years and 9,600 in 5 years under simple interest. Find the principal and the annual rate (in % to 3 decimal places).
Show answer & explanation
Correct answer: A
Explanation
Given:
Amount after 3 years = ₹8400
Amount after 5 years = ₹9600
According to the formula:
Simple Interest = Amount₂ − Amount₁
Interest for 2 years = 9600 − 8400 = 1200
Interest for 1 year = 1200 / 2 = 600
Principal = 8400 − (3 × 600) = 6600
Rate = (Annual Interest / Principal) × 100
= (600 / 6600) × 100
= 9.091%
Principal = ₹6600, Rate = 9.091%