An invested amount, at a simple interest rate, becomes 7/5 times itself in 5 years. What is the annual interest rate?
Show answer & explanation
Correct answer: B
Explanation
Given:
Time = 5 years
Amount = (7/5)P
According to the formula:
SI = (P × R × T)/100
A = P + SI
SI = A − P
SI = (7/5)P − P
SI = (2/5)P
(P × R × 5)/100 = (2/5)P
5R/100 = 2/5
R/20 = 2/5
R = 8%