Question

You borrow Rs. $4,000$ from a loan shark. If you owe Rs. $7,200$ in $4$ years, what would be the simple interest rate?

• A. $10\%$
• B. $20\%$
• C. $30\%$
• D. $40\%$

Answer 1

The correct option is B $20\%$

Given:
Principal $=$ Rs. $4,000$
Interest $=7200-4000=3200$
We know the formula,
Rate of interest, $R=$ $\frac{I\times 100}{PT}$
$\Rightarrow R=$ $\frac{3200\times 100}{4000\times 4}$
$\Rightarrow R=20\%$

Thus, the simple interest rate is $20\%$.