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At what rate (in percentage) per annum will ₹1,300 give ₹520 as simple interest in 8 years?
8%
7%
4%
5%
5%
Since SI is 520 for 8 years, interest per year = 520 / 8 = 65. Then R = (65 / 1300) * 100 = 65 / 13 = 5%.
Principal P = ₹1,300, Simple Interest SI = ₹520, Time T = 8 years
R=P×TSI×100
Since SI is 520 for 8 years, interest per year = 520 / 8 = 65. Then R = (65 / 1300) * 100 = 65 / 13 = 5%.
Confusing Simple Interest with Compound Interest or forgetting that SI is calculated on the principal annually.
Identify known variables
Identify Principal P=1300, Simple Interest SI=520, and Time T=8.
P=1300,SI=520,T=8
State the formula for Rate
The formula for the annual rate of interest is derived from the Simple Interest formula SI=100P×R×T.
R=P×TSI×100
Substitute and solve
Substitute the values into the equation: R=1300×8520×100=1040052000.
R=1040052000=5%
D is correct because the calculated rate of interest is 5% per annum.
This is a fundamental concept for banking exams. Always remember that for Simple Interest, the interest amount is constant every year.
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