Q.If the interest on a principal for 5 years is \(\cfrac{1}{4}\) of the principal, then the annual interest rate will be – (a) 5% (b) 10% (c) 15% (d) 20%
Answer: A
Let the principal \((p) = x\) rupees,
Time \((t) = 5\) years,
Interest \((I) = \cfrac{x}{4}\) rupees.
∴ Rate of interest \((r) = \cfrac{100 \times I}{p \times t}\)
\(= \cfrac{100 \times \cfrac{x}{4}}{x \times 5} = \cfrac{25x}{5x} = 5\% \)
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