Ratio of principal and the amount after 2 years is 20: 30. Find the rate of simple interest per year.25 %20 %15 %12.5 %
Question
Ratio of principal and the amount after 2 years is 20: 30. Find the rate of simple interest per year.
25 %
20 %
15 %
12.5 %
Solution
To find the rate of simple interest, we can use the formula:
I = PRT/100
Where: I = Interest P = Principal R = Rate of interest T = Time
From the problem, we know that the ratio of the principal to the amount after 2 years is 20:30. This means that the interest earned over 2 years is 30 - 20 = 10 units.
We can set up the equation as follows:
10 = 20 * R * 2 / 100
Solving for R, we get:
R = 10 * 100 / (20 * 2)
R = 25%
So, the rate of simple interest per year is 25%.
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