Multiple choice

A sum lent out at simple interest will become 620 Rs. in three years and 700 Rs. in 5 years. What is the rate of interest?

  1. 12%

  2. 14%

  3. 7%

  4. 8%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = amount in 3 years - interest for 3 years. Interest for 2 years (years 4 and 5) = 700 - 620 = 80. So annual interest = 40. Principal = 620 - 120 = 500. Rate = (40/500) × 100 = 8% per annum.

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