A sum lent at simple interest amounts to 13,200 after 2 years and to 15,600 after 5 years. Find the principal and the annual rate of interest.
Show answer & explanation
Correct answer: C
Explanation
Given:
Amount after 2 years = 13,200
Amount after 5 years = 15,600
According to the formula:
In the case of Simple Interest:
Difference = Interest for 1 year × Difference in years
Interest for 3 years = 15,600 − 13,200 = 2,400
Interest for 1 year = 2,400 / 3 = 800
Interest for 2 years = 800 × 2 = 1,600
Principal = 13,200 − 1,600 = 11,600
Rate = (Interest × 100) / (Principal × Time)
= (800 × 100) / 11,600
= 80,000 / 11,600
= 100 / 14.5 ≈ 6.9%
Principal = ₹11,600, Rate ≈ 6.9% per annum