Question : Simple interest received by a person in 10 years on a principal of Rs. 8,500 is 180% of the principal. What is the annual rate of interest?
Option 1: 20%
Option 2: 22.5%
Option 3: 25%
Option 4: 18%
Correct Answer: 18%
Solution :
Given: Simple Interest received by a person in 10 years on a principal of Rs. 8,500 is 180% of the principal.
Let the annual rate of interest be $R$.
180% of principle = $\frac{8500\times 180}{100}$ ---------------(1)
Use the formula, $SI=\frac{P\times R\times T}{100}$ where $SI$, $P$, $R$, and $T$ are the simple interest, principal, rate, and time.
According to the question,
$SI=\frac{8500\times R\times 10}{100}$
From equation (1) we get,
⇒ $\frac{8500\times 180}{100}=\frac{8500\times R\times 10}{100}$
⇒ $R=18$%
Hence, the correct answer is 18%.
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