Ramesh borrowed ₹15,000 at a certain rate of simple interest from a bank. He repaid (the principal but not interest) ₹6,000 after 5 years, and after 5 more years, he paid ₹18,600 and settled his account. Find the rate of simple interest per annum.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 8%.
Given that
Ramesh borrowed ₹15,000 at Simple interest
After 5 years, He paid as principal amount of ₹6,000
After 5 more years, he paid ₹18,600 and settled his account
Formula used
Simple interest = Principal × Rate × Time/100
Amount = Principal + Simple interest
According to the question
⇒ S.I. = 18600 + 6000 - 15000 = ₹9600
Total S.I. = (15000 × Rate × 5/100) + (9000 × Rate × 5/100)
= 750 × Rate + 450 × Rate = 1200 × Rate
Now,
⇒ 1200 × Rate = ₹9600
⇒ Rate = 9600/1200 = 8% p.a.