Find the simple interest charged on borrowing $325 for 5 years at a rate of 3% per annum.

Introduction / Context:
This is a straightforward application of the simple interest formula. You are given the principal, the annual interest rate, and the time period in years, and you need to compute the total simple interest charged over that period.

Given Data / Assumptions:

• Principal (P) = $325.
• Rate of interest (R) = 3% per annum.
• Time (T) = 5 years.
• Interest is simple, not compounded.

Concept / Approach:
The formula for simple interest is SI = (P * R * T) / 100. All that is required is to substitute the given values of principal, rate, and time into this formula and compute the result carefully.

Step-by-Step Solution:
Step 1: Write the simple interest formula: SI = (P * R * T) / 100. Step 2: Substitute P = 325, R = 3, T = 5. Step 3: SI = (325 * 3 * 5) / 100. Step 4: Compute 325 * 3 = 975. Step 5: Multiply 975 * 5 = 4875. Step 6: Divide by 100: SI = 4875 / 100 = 48.75.

Verification / Alternative check:
You can interpret 3% per annum as earning 3% of 325 each year. Three percent of 325 is 9.75. Over 5 years, the interest is 9.75 * 5 = 48.75, which matches the result from the direct formula.

Why Other Options Are Wrong:
59, 46, and 34.75 are either too high or too low and do not result from correctly applying the simple interest formula to the given data.

Common Pitfalls:
Errors usually occur when multiplying the numbers or when forgetting to divide by 100 at the end. Another common mistake is to treat the rate as 0.3 instead of 3, which changes the result dramatically. Being methodical with each step helps avoid such errors.

Final Answer:
The simple interest charged on the loan is 48.75 dollars.