The simple interest on a sum for 6 years is 3/8 of the amount at the end of those 6 years. What is the rate of interest per annum?

Simple & Compound Interest · Question 23 of 60

Question 23

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The simple interest on a sum for 6 years is $\frac{3}{8}$ of the amount at the end of those 6 years. What is the rate of interest per annum?

6.25%Correct answerYour answer7.5%Correct answerYour answer10%Correct answerYour answer12.5%Correct answerYour answer

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CorrectNot quiteAnswer C

Correct answer: C

Amount = $P + I$ and $I = \frac{3}{8}$ of the amount, so $P = \frac{5}{8}$ of the amount.
Hence $\frac{I}{P} = \frac{3}{5}$ , which is 60% of P.
Over 6 years this is $60 \div 6 = 10\%$ per annum.

Worth noting

The fraction is of the AMOUNT, not the principal. Treating $\frac{3}{8}$ as a fraction of P gives $37.5 \div 6 = 6.25\%$ .

Ten questions from Simple & Compound Interest, at your own pace.

Ten questions from Simple & Compound Interest, at your own pace.