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Easy

Question

The simple interest on a sum of money at the end of 5 years is  of the sum. Find the rate of interest?

hintHint:

We have SI to be 4 over 5 of the principal amount.

The correct answer is: 16%


    Complete step by step solution:
    Let the sum of money = P
    It is given that S I equals 4 over 5 times the sum = 4 over 5 P
    We calculate simple interest by the formula, S I equals fraction numerator P T R over denominator 100 end fraction
    where P is Principal amount, T is number of years and R is rate of interest
    Here, we have S I equals 4 over 5 P comma T equals 5,  and R = ?
    On substituting the known values, we have 4 over 5 P equals fraction numerator P cross times 5 cross times R over denominator 100 end fraction
    On rearranging the above equation, we get R equals fraction numerator 4 cross times P cross times 100 over denominator 5 cross times P cross times 5 end fraction
    On further simplifications, we get R equals 16 straight percent sign
    At 16% rate of interest, the simple interest on a sum of money at the end of 5 years is 4 over 5 of sum Itself.

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