Simple Interest Practice Test 4

Question : 11 of 26

Marks: +1, -0

A rural bank lends money at simple interest which it calculates every six months on the principal. What will be the effective rate of interest, if it charges 20% interest?

20%
20.5%
21%
21.25%
21.75%

Validate

Solution:

Let the sum be Rs 100.
Then, SI for the first 6 months = Rs

{100 ×20× 1}/{100× 2}

= Rs 11
So, amount at the end of 1 year = (100 + 10 + 11) = Rs 121
∴ Effective rate = (121 - 100) = 21%

Go to Question:

Prev Question

Next Question