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Bharat borrowed a sum of ₹10,000 at a certain rate of simple interest for 2 years. If he paid an interest of ₹2,000 at the end of the period, then find the rate of interest per annum.
20%
10%
25%
15%
10%
Calculate interest for 1 year: ₹2,000 / 2 = ₹1,000. Now, find what percentage ₹1,000 is of ₹10,000: (1000 / 10000) * 100 = 10%.
Principal P = ₹10,000, Time T = 2 years, Simple Interest SI = ₹2,000
R=P×TSI×100
Calculate interest for 1 year: ₹2,000 / 2 = ₹1,000. Now, find what percentage ₹1,000 is of ₹10,000: (1000 / 10000) * 100 = 10%.
Confusing simple interest with compound interest or using the total interest for the entire period as the annual interest.
Identify given parameters
Identify the principal amount P, time T, and simple interest SI from the problem statement.
P=10000,T=2,SI=2000
State the Simple Interest formula
The formula for simple interest is SI=100P×R×T. Rearranging for rate R gives the formula below.
R=P×TSI×100
Calculate the rate
Substitute the values into the formula: R=10000×22000×100.
R=20000200000=10%
B is correct because the annual interest rate calculation results in 10%.
This basic SI formula is the foundation for compound interest and installment payment calculations in banking aptitude.
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