Question : Money was lent on simple interest. After 12 years, its simple interest becomes $\frac{3}{5}$ of the money. Find the rate of interest.
Option 1: 4% p.a.
Option 2: 2% p.a.
Option 3: 5% p.a.
Option 4: 3% p.a.
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Correct Answer: 5% p.a.
Solution :
Given:
After 12 years, its simple interest becomes $\frac{3}{5}$ of the money.
Let the rate of interest be $r$
Let the principal be $x$.
So, simple interest = $\frac{3x}{5}$
Simple interest=$\frac{\text{Principal × Rate × Time}}{100}$
⇒ $\frac{3x}{5}=\frac{x×r×12}{100}$
⇒ $12r=60$
$\therefore r =5$%
So, the rate of interest is 5%.
Hence, the correct answer is '5% p.a.'.
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