Simple interest on a sum for 5 years is equal to 20 percent of the principal. In how many years interest will be equal to the principal?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 25 years.
principal = P
rate = r
Simple Interest = P × r × t / 100
For 5 years, the interest is given as 20% of the principal:
⇒ P × r × 5 / 100 = 0.20P
⇒ P × r × 5 / 100 = P / 5
⇒r × 5 / 100 = 1 / 5
⇒ r × 5 = 20
⇒r = 4%
The interest in ( t) years will be:
⇒ P × r × t / 100
⇒ P × 4 × t /100 = P
⇒ 4 × t / 100 = 1
⇒ 4 × t = 100
⇒t = 25 years.