Question

Reena took a loan of rs.1200 with simple interest for as many years as the rate of interest. If she paid rs.432 as interest at the end of the loan period, what was the rate of interest?

Answer 1

Answer:

Rate of interest is 6%

Explanation:

Formula for Simple Interest is

SI = (P × R × T)/100

where, P = Principal amount, R = Rate of interest, T = Time in years

Given that Reena took a loan of Rs 1200

Thus, we have P = Rs 1200

Also, Rate of interest is equal to number of years loan is taken

Thus, we have R = T

Also, interest paid by Reena is Rs 432

Thus, we have SI = Rs 432

Substituting the values in formula for Simple Interest, we get

432 = (1200 × R × T)/100

Now, R = T

Thus, we get

432 = (1200 × R × R)/100

432 = 12 × R^2

R^2 = 432/12

R^2 = 36

R = ±√36

R = ±6

Now, rate of interest can never be negative

Hence, rate of interest = 6%