Question

A financial institution claims that it returns three times the principal in 25 years on a certain rate of simple interest per annum. What is the rate of simple interest?

• A. 8%
• B. 6%
• C. 4%
• D. 5%

Answer 1

Answer:

A. 8%

Solution: Given: Returns 3 times the principal in 25 years . Formula used: Simple interest = P × R × T / 100 [ P = principal, R = rate of interest, T = time] Calculation: Let,R = rate of interest Principal is = P The simple interest got by the person is 3P - P = 2P As per the question, ⇒ 2P = P × R × 25 /100 ⇒ R = 8 %