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Ravi lent a sum of money to his friend at simple interest. The amount becomes ₹9000 in 3 years and ₹15240 in 9 years. What is the approximate rate of interest per annum?

1. 22%
2. 20%
3. 18.50%
4. 17.50%

Correct answer: 17.50%

Solution

Under simple interest, the difference between amounts at 9 years and 3 years equals interest for 6 years. That difference is ₹6240, so yearly interest is ₹1040. Using the 3-year amount, the principal is ₹5880, giving a rate of about 17.5% per annum.

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