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Simple & Compound Interest · Question 7 of 60

Question 7

EasyOriginal question

A sum lent at simple interest becomes 95\frac{9}{5} of itself in 10 years. What is the rate of interest per annum?

Options for question 7

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Interest = 95P−P=45P\frac{9}{5}P - P = \frac{4}{5}P, which is 80% of P.

  2. Over 10 years that is 80÷10=8%80 \div 10 = 8\% per annum.

Worth noting

Taking the whole 95\frac{9}{5} (180%) as interest gives 18%, and 80% is the interest for all 10 years together. The sum itself is part of the 95\frac{9}{5}.

Concept
Rate from the fraction by which a sum grows
Typical time
40 s
Your time
—
The rule this testsSimple interest
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