Johnny borrows Rs.7,000 from a bank at simple interest. After 3 years he pays Rs.4,000 to the bank, this amount being entirely adjusted as repayment of part of the principal borrowed. At the end of 5 years from the date of borrowing he pays Rs. 4,350 to the bank to settle the account. Find the rate of interest.

Correct option is D

​Given:

Principal = 7,000 Rs.

After 3 years, repayment of Rs. 4,000.

Remaining principal = 7,000 − 4,000 = 3,000 Rs..

After 5 years, total payment = Rs. 4,350

Formula Used:

$$\text{SI} = \frac {\text{Principal} \times \text{Rate} \times \text{Time}} {100}$$​​

Solution:

Total interest paid:

$$\text{Interest on Rs. 7,000 for 3 years} + \text{Interest on Rs. 3,000 for 2 years}$$​​

Total SI = 4,350 − 3,000 = 1,350 Rs. 

So, 

​$$1,350 = 7,000 \times \frac{R \times 3}{100} + 3,000 \times \frac{R \times 2}{100}$$​​

​$$1,350 = 210R + 60R \\ \ \\ \Rightarrow 1,350 = 270R$$​​

​$$R = \frac{1,350}{270} = 5\%$$​​