A sum of money becomes 4 times at simple interest in 10 years. What is the rate of interest?
Question
A sum of money becomes 4 times at simple interest in 10 years. What is the rate of interest?
Solution
To find the rate of interest, we can use the formula for simple interest which is:
I = PRT/100
Where: I = Interest P = Principal amount (initial investment) R = Annual interest rate (in decimal) T = Time (in years)
Given in the problem:
- The sum of money becomes 4 times in 10 years. This means that the interest gained is 3 times the original sum. So, I = 3P.
- T = 10 years.
Substituting these values into the formula, we get:
3P = P * R * 10 / 100
Solving for R, we get:
R = 3P * 100 / (P * 10) R = 30%
So, the rate of interest is 30% per annum.
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