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A sum of ₹5,000 earns ₹1,500 as simple interest in 5 years. What is the rate of interest?
5%
6%
7%
8%
6%
Find annual interest = ₹1500 / 5 = ₹300. Rate percentage = (300 / 5000) ×100=6%.
Principal P = ₹5,000, Simple Interest SI = ₹1,500, Time T = 5 years
SI=100P×R×T
Find annual interest = ₹1500 / 5 = ₹300. Rate percentage = (300 / 5000) ×100=6%.
Confusing simple interest total accumulation with compound interest compounding effect.
Extract Given Values
Identify P=5000, SI=1500, and T=5 years from the question text.
P=5000,SI=1500,T=5
Substitute in Formula
Plug values into the simple interest formula: 1500=1005000×R×5.
1500=1005000×R×5
Solve for Rate R
Simplify the equation: 1500=250R⟹R=2501500=6.
R=6%
B is correct because the calculated rate of interest is 6%.
In simple interest, the interest earned per year is constant, whereas compound interest adds previous interest to the principal base.
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