Multiple choice

Amit invested some money at simple interest in such a way that the sum became Rs. 20,000 in 2 years and became Rs. 25,000 in 4.5 years. Find the rate of interest?

  1. 12.5%

  2. 10%

  3. 10.5%

  4. 12%

  5. 14%
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A Correct answer
Explanation

Simple interest for 2.5 years (4.5 - 2) is 5000 (25000 - 20000). Interest per year = 5000 / 2.5 = 2000. Principal = 20000 - (2 * 2000) = 16000. Rate = (2000 / 16000) * 100 = 12.5%.

AI explanation

Using the simple interest method, the extra interest earned over 2.5 years is the difference between the final amounts, which is Rs. 25,000 minus Rs. 20,000 equals Rs. 5,000, meaning the annual interest is Rs. 2,000. The interest for the first two years is Rs. 4,000, making the principal sum Rs. 16,000. Applying the formula Rate equals Interest multiplied by 100 divided by (Principal multiplied by Time), we get 2000 multiplied by 100 divided by (16000 multiplied by 2), equaling 12.5%.

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