Question

A sum of Rs. 625.25 was lent out at simple interest and at the end of 2 years 8 months the total amount was Rs. 725.29. Find the rate of interest per annum.

Answer 1

Simple interest formula :

Principle × rate × time

Time = 2.667 years

625. 25 × rate × 2.667 = 1667.5r

Accumulated amount :

625.25 + 1667.5r = 725.29

1667.5r = 725.29 - 625.25

1667.5r = 100.04

r = 100.04/1667.5

r = 0.05999

0.05999 × 100 = 5.999%