₹2,500, when invested for 8 years at a given rate of simple interest per year, amounted to ₹ 3,725 on maturity. What was the rate of simple interest that was paid per annum?
Answer & explanation
Correct answer: option 2
Principal = Rs 2500
Amount = Rs 3725
Interest = Amount - Principal = 3725 - 2500 = Rs 1225
Interest = 1225 for 8 years
Interest for 1 year = \(\frac{1225}{8}\)
∴ Rate% = \(\frac{Interest}{Principal}\) × 100
∴ Rate% = \(\frac{1225/8}{2500}\) × 100 = 6.125%