Question

The simple interest on birr 600 invested for 3 months was birr 15. What is the annual rate of interest?

A) 5%
B) 7%
C) 10%
D) 12%

Answer 1

The annual rate of interest is 10%.

Step-by-step explanation:

To find the annual rate of interest, we can use the formula for simple interest:

Simple Interest = Principal x Rate x Time

Given that the principal (P) is birr 600, the time (T) is 3 months (or 0.25 years), and the interest (I) is birr 15, we can substitute these values into the formula:

15 = 600 x Rate x 0.25

Rearranging the formula to solve for the rate:

Rate = 15 / (600 x 0.25) = 0.1 = 10%

Therefore, the annual rate of interest is 10%.