Determine the interest rate percentage under which an initial principal of Rs.150 grows to Rs. 220 across 10 years.
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Answer: B. 14/3%
Explanation
Subtracting the initial principal from the final amount gives the total simple interest earned. Dividing the total interest by the ten-year duration yields the average annual interest earned. Dividing the annual interest by the principal and multiplying by one hundred gives the percentage rate. Simple interest is calculated as a fixed percentage of the initial principal over time. Interest rates are conventionally expressed as an annual percentage yield relative to the principal. Linear growth equations govern simple interest accumulations across multi-year investment periods.
Basic financial literacy involves calculating returns on savings accounts and simple loans. Personal finance management requires evaluating long-term investment growth rates accurately. Banking institutions use simple interest formulas for short-term borrowing arrangements. Option A represents an incorrect fraction resulting from arithmetic errors in the rate formula. Option C overestimates the annual interest yield relative to the initial principal. Option D provides an inflated percentage rate that exceeds the actual calculated earnings.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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