A bank pays back a sum of ₹ 12,000 to Sam who had invested ₹ 10,000for 4 years. Find the rate of interest
Question
Solution
To find the rate of interest, we first need to find the amount of interest earned.
Step 1: Calculate the interest Interest = Total amount returned - Initial investment Interest = ₹12,000 - ₹10,000 = ₹2,000
Step 2: Use the formula for simple interest to find the rate The formula for simple interest is I = PRT/100, where I is the interest, P is the principal amount (initial investment), R is the rate of interest, and T is the time in years.
We can rearrange this formula to find the rate: R = I * 100 / (P * T)
Step 3: Substitute the values into the formula R = ₹2,000 * 100 / (₹10,000 * 4) = 5%
So, the rate of interest is 5%.
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