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Simple and Compound Interest
A sum of money amounts to Rs. 9800 after 5 years and Rs. 12005 after 8 years at the same rate of simple interest. The rate of interest per annum is:
Correct answer: C
Explanation and memory cue
Given the amounts after 5 years (Rs. 9800) and 8 years (Rs. 12005) with simple interest, the difference in amount over 3 years is Rs. 12005 - Rs. 9800 = Rs. 2205, which is the interest for 3 years. Therefore, interest for 1 year = 2205 / 3 = Rs. 735. The principal can be calculated by subtracting the interest for 5 years from Rs. 9800: Principal = 9800 - (735 * 5) = 9800 - 3675 = Rs. 6125. The rate of interest per annum = (Interest per year / Principal) * 100 = (735 / 6125) * 100 ≈ 12%. This matches option C. The original answer 'B' was incorrect, and the explanation correctly supports option C as the right answer.