A person invests Rs. 12000 as fixed deposit at a bank at the rate of 10% per annum simple interest. But due to some pressing needs he has to withdraw the entire money after three years, for which the bank allowed him a lower rate of interest. If he gets Rs. 3320 less than what he would have got at the end of 5 years, the rate of interest allowed by the bank is = ?

Explanation:-

Principal = Rs. 12000
Rate % = 10%
Interest paid by the person in 5 years
$$\eqalign{ & = \frac{{12000 \times 10 \times 5}}{{100}} \cr & = {\text{Rs}}{\text{. 6000}} \cr}$$
Interest received by the person after 3 years
$$\eqalign{ & = {\text{Rs}}{\text{. }}\left( {6000 - 3320} \right) \cr & = {\text{Rs}}{\text{. 2680}} \cr & {\text{By using formula,}} \cr & {\text{Rate}}\% \cr & {\text{ = }}\frac{{2680}}{{12000}} \times \frac{{100}}{3} \cr & = \frac{{67}}{9} \cr & = 7\frac{4}{9}\% \cr & {\text{Hence required rate}}\% \cr & {\text{ = 7}}\frac{4}{9}\% \cr}$$