Answer : Option B

Explanation :

Let the automobile financier lends Rs.100
$MF#%\text{Simple Interest for first 6 months = }\dfrac{\text{PRT}}{100}= \dfrac{100 \times 10 \times \dfrac{1}{2}}{100}=\text{Rs. }5$MF#%
After 6 months, he adds the simple interest to principal
i.e., after 6 months, principal becomes Rs.100 + Rs.5 = Rs.105
$MF#%\text{Simple Interest for next 6 months = }\dfrac{\text{PRT}}{100}= \dfrac{105 \times 10 \times \dfrac{1}{2}}{100}=\text{Rs. }5.25$MF#%
Amount at the end of 1 year = Rs.105 + Rs. 5.25 = Rs.110.25
i.e., Effective Simple Interest he gets for Rs.100 for 1 year = 110.25 - 100 = 10.25
i.e, the Effective Rate of Interest = 10.25%
$MF#%\color{#F00}{(∵ \text{R = }\dfrac{100 \times \text{SI}}{\text{PT}} = \dfrac{100 \times 10.25}{100 \times 1} = 10.25\%)}$MF#%