Final answer:
The rate of interest Raghav was charged is 1.14% per year, computed using the simple interest formula after he borrowed Rs. 23,900 and paid back Rs. 25,000 over 4 years. In the given examples, a $5,000 loan at 6% simple interest for 3 years yields $900 of interest, and $500 interest on a $10,000 loan over 5 years results in a 0.1% interest rate.
Step-by-step explanation:
To calculate the rate of interest that Raghav was charged, we can use the simple interest formula I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years. Raghav borrowed Rs. 23,900 and paid back Rs. 25,000 after 4 years, so the interest (I) he paid is Rs. 25,000 - Rs. 23,900 = Rs. 1,100. The time (T) is 4 years, and the principal (P) is Rs. 23,900.
We can rearrange the formula to solve for the rate (R) as follows: R = I / (PT). Plugging in the numbers we get: R = 1100 / (23900 * 4), which simplifies to R = 0.0114 (or 1.14%) per year. Therefore, the annual rate of interest he was charged is 1.14%.
Using the examples provided:
- The total amount of interest from a $5,000 loan after three years at a 6% simple interest rate would be 5000 * 0.06 * 3 = $900.
- If you receive $500 in interest on a loan of $10,000 for five years, the interest rate you charged would be calculated as R = I / (PT) or R = 500 / (10000 * 5) = 0.001 or 0.1% per year.