Final answer:
The rate of interest, given that the simple interest is 3/8 of the principal over 3 years, is found to be 12.5%.
Step-by-step explanation:
Finding the Rate of Interest
The question requires us to find the rate of interest given that the interest is 3/8 of the principal over a period of 3 years. The interest I, principal P, and time T (in years) are related through the simple interest formula: I = PRT/100, where R is the rate of interest. In our case, I = (3/8)P and T = 3 years.
To find the interest rate (R), we can rearrange the simple interest formula: R = (I * 100) / (P * T).
Substituting the given values: R = ((3/8)P * 100) / (P * 3) = (3/8 * 100) / 3 = 12.5%. Thus, the rate of interest is 12.5%.
Remember that this calculation assumes the interest earned is simple interest, which means that it does not compound over time. Comparatively, compound interest would result in interest earning on both the initial principal and the accumulated interest over time, potentially leading to a different outcome.