Q.If \(\cfrac{1}{20}\) of a principal amount is the annual interest, then the interest rate will be. (a) 4% (b) 5% (c) 10% (d) 8%
Answer: B
Let the principal \((p) = x\) rupees.
Time \((t) = 1\) year.
Interest \((I) = \cfrac{x}{20}\) rupees.

∴ Interest rate \((r) = \cfrac{100 \times I}{p t}\)
\(= \cfrac{100 \times \cfrac{x}{20}}{x \times 1} = \cfrac{5x}{x} = 5\%\).
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