Question

At what rate of simple interest, a sum of ₹1,800 will become ₹2,700 in 10 years?

• A. 10%
• B. 6%
• C. 6.75%
• D. 5%

Answer 1

The Correct Option is D

To determine the rate of simple interest at which an initial sum of ₹1,800 becomes ₹2,700 in 10 years, we use the formula for simple interest:

Simple Interest (SI) = P × r × t where:

• P is the principal amount (₹1,800),
• r is the rate of interest per annum in decimal,
• t is the time in years (10 years).

The total amount after time t is given by:

A = P + SI

Substitute the values:

₹2,700 = ₹1,800 + ₹1,800 × r × 10

Simplify to find r:

₹2,700 - ₹1,800 = ₹1,800 × r × 10

₹900 = ₹1,8000r

r = ₹900 / ₹18,000

r = 0.05

Convert r to a percentage by multiplying by 100:

r = 0.05 × 100 = 5%

Thus, the rate of simple interest is 5%.