Amit borrowed Rs. 8000 from a moneylender with Simple interest for as many years as the rate of interest. If he paid Rs. 2000 as interest at the end of loan period, what was the rate of interest?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 5%
Principal amount (P) = Rs 8000
Simple interest (SI) = Rs 2000
Let,
Rate of interest (r) = x%
Time (t) = x years
Now, according to the formula,
SI = (P × r × t)/100
⇒ 2000 = (8000 × x × x)/100
⇒ x2 = 25
⇒ x = 5