A certain sum of money is invested for one year at a certain rate of simple interest. If the rate of interest is 3% higher, then the invest earned will be 25% more than the interest earned earlier. What is the earlier rate of interest ?

A certain sum of money is invested for one year at a certain rate of simple interest. If the rate of interest is 3% higher, then the invest earned will be 25% more than the interest earned earlier. What is the earlier rate of interest ? Correct Answer 12% p.a.

If the interest earned is 25% more than the earlier interest then the rate of interest also should be 25% higher than the earlier rate. Let the earlier rate of interest be x%. Now it will be (x + 3)% % increase = (x + 3) - x/x * 100 = 25=> x = 12%

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