A sum of Rs. 12,000 grows to Rs. 13,600 in 4 years under simple interest. What is the annual interest rate?
Correct answer: B. 3.33%
- A. 3.00%
- B. 3.33%
- C. 4.00%
- D. 4.33%
Explanation
The simple interest is Rs. 1,600. Since I = PRT, the rate is 1,600 divided by Rs. 12,000 multiplied by 4, which equals 3.33% per annum. The total amount is not used as the principal in this formula.
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About Financial Mathematics: Interest, Annuities and Discounting
Financial mathematics covers simple and compound interest, principal, rate, time, accumulated value and present value. It also includes annuities, regular payments, sinking funds, loan repayments and discounting, with a distinction between ordinary annuities and annuities due and between trade discount and mathematical discount.
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