Question

If the simple interest on $800 for 3 years is $54, what is the rate of interest per annum?

a. 2 1/4%
b. 1/4%
c. 2 %
d. 3 1/4%

Answer 1

Using the simple interest formula, I = P × R × T, and given values, the rate of interest per annum is calculated to be 2.25%, which corresponds to option a, 2 1/4%.

Step-by-step explanation:

To calculate the rate of interest per annum for the given simple interest situation, we first need to understand the formula for simple interest, which is:

I = P × R × T

Where:

• I is the interest earned or paid
• P is the principal amount (initial amount of money)
• R is the rate of interest per annum
• T is the time the money is invested or borrowed for, in years

In this particular problem, we are given the following information:

• I (Simple Interest) = $54
• P (Principal) = $800
• T (Time) = 3 years

Substituting the known values into the simple interest formula, we get:

$54 = $800 × R × 3

From this equation, we can solve for R (rate of interest per annum) as follows:

$54 = $2400 × R

R = $54 / $2400

R = 0.0225 or 2.25%

So, the rate of interest per annum is 2 1/4%, which is option a.