Q.Principal: One-year interest-principal ratio = 20:21. Then, the annual percentage interest rate is -. (a) 10% (b) 4% (c) 5% (d) 8%
Answer: C
Let the principal \((p) = 20x\) currency units.
Interest-principal amount \(= 21x\) currency units.
\(\therefore\) Interest \((I) = (21x - 20x)\) currency units \(= x\) currency units.
Time \((n) = 1\) year.

\(\therefore\) Interest rate \((r) = \cfrac{100\times I}{pn}\%\)
\(= \cfrac{100\times x}{20x\times 1}\%\)
\(= 5\%\)

\(\therefore\) Interest rate is \(5\%\).
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