Question : A person borrowed some money at simple interest. After 4 years, he returned $\frac{9}{5}$th of the money to the lender. What was the rate of interest?
Option 1: 25% per annum
Option 2: 10% per annum
Option 3: 15% per annum
Option 4: 20% per annum
Correct Answer: 20% per annum
Solution :
Let the amount of money borrowed $=x$
The amount he returned to the lender $= \frac{9}{5}x$
Simple Interest $ = \frac{9}{5}x - x = \frac{4}{5}x$
Time = 4 years
We know, Simple interest $=\frac{\text{Principal × Rate × Time}}{100} = \frac{x\times \text{Rate}\times 4}{100}$
⇒ $\frac{4}{5} x=\frac{x\times \text{Rate}\times 4}{100}$
$\therefore$ Rate = 20%
Hence, the correct answer is 20%.
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