Question : Simple interest received by a person in 12 years on a principal of INR 12000 is 120% of the principal. What is the annual rate of interest?
Option 1: 20%
Option 2: 12%
Option 3: 10%
Option 4: 5%
Correct Answer: 10%
Solution :
Principal, $P$ = INR 12000
Term, $n$ = 12 years
Simple interest, SI = 120% × $P$ = $\frac{120P}{100}$
Let $R$ be the rate of interest.
SI = $\frac{PnR}{100}$
⇒ $\frac{120P}{100}$ = $\frac{P×12×R}{100}$
⇒ $R$ = $\frac{120}{12}$ = 10%
Hence, the correct answer is 10%.
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