Multiple choice

With the given rate of simple interest, the ratio of principle and amount for a certain period of time is 4:5. After 3 years, with the same rate of interest, the ratio of the principle and amount becomes 5:7. Find the rate of interest.

  1. 4%

  2. 6%

  3. 5%

  4. 7%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let P be principal and R be rate. Initially P/A = 4/5, so interest for some time T is P/4. After 3 years, P/A = 5/7. By setting up the simple interest equations (I = PRT/100), one can solve for the rate. The calculation yields 5%.

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