Q.What should the interest rate be so that the interest for 2 years on a certain amount of money equals \(\cfrac{1}{4}\) of the principal? (a) 10% (b) 12.5% (c) 15% (d) 25%
Answer: B
Let’s assume the principal \((p) = x\) amount of money.
\(\therefore\) Total interest \((I) = \cfrac{x}{4}\) amount of money.
Time \((t) = 2\) years.

\(\therefore\) Interest rate \((r) = \cfrac{100\times I}{pt}\%\)
\(=\cfrac{100\times \cfrac{x}{4}}{x\times 2} \%\)
\(=\cfrac{25}{2}\%=12.5\%\)
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