Question : If the simple interest on Re.1 for 1 month is 1 paisa, then the rate of interest per annum will be:
Option 1: 10%
Option 2: 8%
Option 3: 12%
Option 4: 6%
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Correct Answer: 12%
Solution :
Given:
Principal = Re.1
Time = 1 month = $\frac{1}{12}$ year
Simple interest = 1 paisa = Rs.$\frac{1}{100}$
Simple interest =$\frac{\text{Principal×Rate×Time}}{100}$
⇒ Rate = $\frac{\frac{1}{100}×100}{1×\frac{1}{12}}$
$\therefore$ Rate $=12$% per annum
Hence, the correct answer is 12%.
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