If sum of money becomes 7/4 of itself in 3 years at certain rate of simple interest then find rate per annum
1. 22% p.a
2. 25% p.a
3. 24% p.a
4. 20% p.a
1. 22% p.a
2. 25% p.a
3. 24% p.a
4. 20% p.a
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Correct Answer – Option 2 : 25% p.a
Given:
Time = 3 years
Amount ∶ Principal = 7 ∶ 4
Formula Used:
Interest = Amount – Principal
Simple interest = Principal × Interest Rate × Time /100
Calculation:
Amount/Principal = 7/4
So, Principal = 4x
And, Amount = 7x
Interest = Amount – Principal
⇒ 3x = 7x – 4x
Simple interest = Principal × Interest Rate × Time /100
⇒ 3x = 4x × R × 3/100
⇒ R = 25% p.a.
∴ The rate of interest is 25% p.a.