Question : The rate of simple interest at which a sum of money becomes five times its own value in eight years is:
Option 1: 30%
Option 2: 40%
Option 3: 50%
Option 4: 55%
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Correct Answer: 50%
Solution :
Assume the sum of money is $P$.
It will become 5 times after 8 years = $5P$.
So, Simple interest = $5P - P = 4P$.
Rate = $r$
Simple interest = $\frac{\text{Principal×Rate×Time}}{100}$
⇒ $4P = \frac{P×r×8}{100}$
⇒ $r = 50$%
Hence, the correct answer is 50%.
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