A sum of money amounts to Rs. 9800 after 5 years and Rs. 12005 after 8 years at the same rate of simple interest. The rate of interest per annum is:

Difficulty: Easy

10% per annum
11% per annum
12% per annum
13% per annum

Correct Answer: 12% per annum

Explanation:

Given

Amount after 5 years = Rs. 9,800
Amount after 8 years = Rs. 12,005

Step 1: Find annual interest
Increase over 3 years = 12,005 − 9,800 = 2,205So, interest per year I = 2,205 / 3 = 735

Step 2: Find principal
After 5 years: A = P + 5I ⇒ 9,800 = P + 5 × 735P = 9,800 − 3,675 = 6,125

Step 3: Rate
r = (I / P) × 100 = (735 / 6,125) × 100 = 12% per annum

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