The simple interest received on a sum for 5 years is 2/5 of the sum. What is the annual rate of interest?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 8 percent.
the principal = P
the annual rate of interest = r
t = 5 years
SI = (P × r × t)/100
the simple interest received is 2/5 of the principal, so:
SI = 2/5P
Hence
⇒ (P × r × 5)/100 = 2/5 P
⇒ r = (2 × P × 100)/(P × 5 × 5)
⇒ r = 8%