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A sum of money becomes 7⁄5 of itself in 4 years at a certain rate of simple interest. The rate per annum is :

Correct answer: B. 10%

  • A. 9%
  • B. 10%
  • C. 11%
  • D. 12%Primary & Secondary Schooling (K-12)

Explanation

An amount of 7/5 of the principal means the interest is 7/5 - 1 = 2/5, or 40% of the principal, over 4 years. Therefore, the annual rate is 40%/4 years = 10% per annum. The likely trap is 9%, which does not correctly convert the total 40% interest into an annual rate.

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