A sum of Rs 12,500 amounts to Rs 15,500 in 4 years at the rate of simple interest. What is the rate of interest?
Question
A sum of Rs 12,500 amounts to Rs 15,500 in 4 years at the rate of simple interest. What is the rate of interest?
Solution
To find the rate of interest, we can use the formula for simple interest which is:
I = PRT/100
Where: I = Interest P = Principal amount (the initial amount of money) R = Rate of interest T = Time period
In this case, we know the principal amount (P) is Rs 12,500, the total amount after 4 years is Rs 15,500, so the interest (I) earned is Rs 15,500 - Rs 12,500 = Rs 3,000. The time period (T) is 4 years. We need to find the rate of interest (R).
Substituting the known values into the formula, we get:
3000 = 12500 * R * 4 / 100
Solving this equation for R gives us:
R = (3000 * 100) / (12500 * 4)
R = 6
So, the rate of interest is 6% per annum.
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