Multiple choice

A sum of money lent out at simple interest amounts to Rs.720 after 2 years and to Rs. 1020 after a further period of 5 years. Find the rate %

  1. 10

  2. 15

  3. 20

  4. None
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A Correct answer
Explanation

Simple interest for 5 years is 1020 - 720 = 300. Interest for 1 year is 300 / 5 = 60. Interest for 2 years is 120. Principal is 720 - 120 = 600. Rate = (Interest * 100) / (Principal * Time) = (60 * 100) / (600 * 1) = 10%.

AI explanation

The simple interest for 5 years is the difference between the two amounts, which is 1020 - 720 = 300 rupees. This means the annual interest is 300 / 5 = 60 rupees, and the interest for the first 2 years is 120 rupees. The principal amount is the initial amount minus its 2-year interest, giving 720 - 120 = 600 rupees. Using the formula Rate = (100 * Simple Interest) / (Principal * Time) with the first year's interest of 60 rupees, the rate is (100 * 60) / (600 * 1) = 10%. The result is 10.

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