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Arun borrowed Rs. 22500 from a bank at simple interest and returned Rs. 12500 after 2 years as 1st installment and at the end of 4 years he paid Rs. 7500 as 2nd installment and at the end of 7 years he paid Rs. 6125 as 3rd installment to clear his dues. What was the rate of interest?

Arun borrowed Rs. 22500 from a bank at simple interest and returned Rs. 12500 after 2 years as 1st installment and at the end of 4 years he paid Rs. 7500 as 2nd installment and at the end of 7 years he paid Rs. 6125 as 3rd installment to clear his dues. What was the rate of interest? Correct Answer 5%

Given:

Arun borrowed Rs. 22500 from a bank at simple interest.

He returned Rs. 12500 after 2 years as 1st installment.

He paid Rs. 7500 as 2nd installment after 4 years.

He paid Rs. 6125 as 3rd installment after 7 years to clear his dues.

Formula used:

S.I = P × R × T /100

Calculation:

Let the rate percent be R% per annum

Total amount paid by Arun = Rs. (12500 + 7500 + 6125) = Rs. 26125

Total amount borrowed by Arun = Rs. 22500

So, total interest paid by Arun = Rs. = 26125 - 22500 = 3625

Now,

Principal for first two years = Rs. 22500

S.I = 22500 × R × 2/100 = 450R

Principal for next two years = Rs. (22500 - 12500) = Rs. 10000

S.I = 10000 × R × 2/100 = 200R

Principal for next 3 years = Rs. (10000 - 7500) = Rs. 2500

S.I = 2500 × R × 3/100 = 75R

So, total S.I = 450R + 200R + 75R

⇒ Total S.I = 725R

So, 725R = 3625

⇒ R = 3625/725

∴ R = 5%

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