A sum of Rs. 12,500 amounts to Rs. 15,500 in 4 years at the rate of simple interest. What is the rate of interest?

Given

• Principal P = Rs. 12,500
• Amount A = Rs. 15,500
• Time t = 4 years

Simple InterestSI = A − P = 15,500 − 12,500 = 3,000SI = 𝑃 × 𝑟 × 𝑡 100 100 P×r×t ​ ⇒ 3,000 = 12 , 500 × 𝑟 × 4 100 100 12,500×r×4 ​ 3,000 = 500r ⇒ r = 3 , 000 500 500 3,000 ​ = 6% per annum