Test Index

Time Value of Money

© examsnet.com

Question : 31 of 99

Marks: +1, -0

A Sum of

\text{₹} 46,875

was lent out at simple interest and at the end of

1 \text{yr}

and 8 months the total amount was

\text{Rs. } 50,000.

Find the rate of interest.

$4 \%$
$5 \%$
$4.5 \%$
$6 \%$

Solution:

Concept:

Simple interest is calculated as

SI = \frac{P \times R \times T}{100}

, where

P

= principal,

R

= rate per annum,

T

= time in years.

Explanation:

Given:

P = ₹46,875

, Amount

A = ₹50,000

, Time

T = 1 \text{ yr } 8 \text{ months} = 1 + \frac{8}{12} = \frac{5}{3}

years.

SI = A - P = 50,000 - 46,875 = ₹3,125

.

Using formula:

3125 = \frac{46875 \times R \times \frac{5}{3}}{100}

.

Simplify:

3125 \times 100 = 46875 \times R \times \frac{5}{3}

.

312500 = 46875 \times R \times \frac{5}{3}

.

R = \frac{312500 \times 3}{46875 \times 5} = \frac{937500}{234375} = 4

.

Thus, rate =

4\%

per annum.

Answer:

4\%

© examsnet.com

Go to Question:

Prev Question

Next Question