Skip to main contentSkip to solution

A bank lends money at 12% per annum on simple interest. A customer borrows ₹ 50,000 for 9 months and repays after receiving a 5% rebate on total interest amount. What effective annual interest rate did he pay?

Solution

✅ Correct Option: 4

Interest =50000×12100×912=4500= 50000 \times \dfrac{12}{100} \times \dfrac{9}{12} = 4500.

After a 5 percent rebate, interest paid =4275= 4275.

Effective annual rate =427550000×0.75×100=11.4%= \dfrac{4275}{50000 \times 0.75} \times 100 = 11.4\%.

Equivalently, 12%×0.95=11.4%12\% \times 0.95 = 11.4\%.

Keyboard Shortcuts

  • Left arrow: Previous question
  • Right arrow: Next question
  • S key: Jump to solution
  • Q key: Jump to question