Question

A sum of Rs. 10 is lent to be returned in 11 months installments of Rs. 1 each, interest being simple. The rate of interest is
A)$ 9\dfrac{1}{{11}}\% $
B) 10%
C) 11%
D) $21\dfrac{9}{{11}}\% $

Answer 1

Hint: First see how much money is left. Find the money received at the end of the given time. After finding these use the formula for the rate of interest and proceed with the calculations further.

Complete step-by-step answer:
Money lent = Rs. 10
Money received at the end of one month = Rs. 1
Money received after 11 months= Rs 1 ×11 = Rs. 11
Using the formula of rate of interest
Rate of interest = (Money received – money lent)/ time)× 100

$
   \Rightarrow \dfrac{{11 - 10}}{{11}} \times 100 \\
   \Rightarrow \dfrac{{100}}{{11}}\% \\
   \Rightarrow 9\dfrac{1}{{11}}\% \\
$
Therefore, the correct option is ‘a’.

Note: An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed. The total interest on an amount lent, or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.