А sum become Rs. 1320 in 2 years and Rs. 1380 in 3 years at simple interest. What is the annual rate of interest ?
Show answer & explanation
Correct answer: B
Explanation
The correcct answer is option 2 i.e. 5%.
The interest for 1 year:
⇒ 1380 - 1320 = 60 Rs.
Simple Interest = P × R × T / 100
The interest for 1 year is Rs. 60, for 2 years it would be Rs. 60 × 2 = Rs. 120
⇒ 120 = P × R × 2 / 100
⇒ 120 = P × R × 2 / 100 ⇒ P × R = 6000
The formula for 1 year of simple interest is:
SI = P × R × 1 / 100
⇒ 60 = P × R / 100
⇒ 6000 = P × R
The total amount after 2 years (Rs. 1320) and the interest of Rs. 120 for 2 years:
⇒ P + 120 = 1320
⇒ P = 1320 - 120 = 1200
The rate of interest (R)
⇒ 1200 × R = 6000
⇒ R = 6000 / 1200 = 5%