Multiple choice

The simple interest of a certain sum of money is (\frac{16}{25}) of its principal. The number of years is equal to the interest rate per year. What is the interest rate (in percentage) per year?

  1. 4

  2. 16

  3. 8

  4. 12
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let principal = P, rate = r% per year, time = t years. Given: SI = (16/25)P and t = r. SI = P × r × t/100 = P × r × r/100 = Pr^2/100. So Pr^2/100 = 16P/25. r^2/100 = 16/25. r^2 = 16 × 100/25 = 64. r = 8% (since r cannot be negative). Verifying: SI = P × 8 × 8/100 = 64P/100 = 16P/25. Correct.

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