The interest earned on ₹25000 in 5 years at simple interest is ₹1500. What is the rate of interest?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 1.2%
Simple interest is \(\displaystyle \text{SI}=\frac{P\times R\times T}{100}\), so the rate is found from the interest, the principal and the time: \(\displaystyle R=\frac{100\times\text{SI}}{P\times T}\).
Here the principal is ₹25000, the interest ₹1500 and the time 5 years.
\(\displaystyle R=\frac{100\times1500}{25000\times5}=\frac{150000}{125000}\)
\(R=1.2\%\) per annum