Sitaram, a money lender lent a part of Rs 200000 to Shyam at simple interest 6% p.a. and the remaining to Sushil at 10% p.a. at simple interest. Sitaram earned an annual interest income of Rs. 18000. Based on the given information answer the following questions :
What is the mean rate of interest?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 9% p.a.
The mean rate of interest is the rate at which the whole sum would earn the same total interest in a year:
\( \displaystyle \text{mean rate} = \frac{18000}{200000} \times 100 \)
\( = 9\% \text{ p.a.} \)
Tip: The mean rate is a weighted average of 6% and 10%, weighted by the amounts lent. It equals the simple average 8% only when the two amounts are equal.