Question

A sum of money becomes $\frac{41}{40}$ of itself in $\frac{1}{4}$ year at a certain rate of simple interest. The rate of interest $p.a.$ is:

• A. $10\%$
• B. $1\%$
• C. $2.5\%$
• D. $5\%$

Answer 1

The correct option is A $10\%$

Let the sum of money at the start of the year be 40. Therefore it earns 1 re. interest in 1/4th year.

Therefore it will earn 4 Rs. interest in the full year.

On simple interest terms, the rate of interest is 4/40 * 100 that is 10%.