Multiple choice

Nitya took a loan of Rs. 500000 with simple interest for as many years as the rate of interest. If he paid Rs. 80000 as interest at the end of the loan period, then what was the rate of interest?

  1. 3%

  2. 4%

  3. 5%

  4. 10%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple Interest = (P * R * T) / 100. Given R = T, 80000 = (500000 * R * R) / 100. 80000 = 5000 * R^2. R^2 = 16. R = 4%.

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