A charity organization has a fund of Rs.2,00000 to provide annual grants to students. The grant amount each year is Rs.15,000. The fund earns an interest rate of r% per annum. if the interest earned is used entirely to provide the grants, then the annual interest rate r is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 7.5% **
$\text{Total fund}=200000$
$\text{Annual grant}=15000$
$\text{Interest earned per year must equal the grant:}$
$\frac{r}{100}\times 200000=15000$
$2000r=15000$
$r=\frac{15000}{2000}$
$r=\frac{15}{2}$
$r=7.5\%$