Question 63

If the total simple interest received on a sum for 25 years is $$\frac{5}{8}$$ of the principal, what is the rate of simple interest paid per annum?

Solution

Let's assume the principal amount, rate and time are P, R and T respectively.

If the total simple interest received on a sum for 25 years is $$\frac{5}{8}$$ of the principal.

$$simple \ interest\ =\ \frac{P\times\ R\times\ T}{100}$$
$$\frac{5}{8}P\ =\ \frac{P\times\ R\times\ 25}{100}$$

$$\frac{5}{8}\ =\ \frac{\ R}{4}$$

$$\frac{5}{2}\ =\ \ R$$
Rate of simple interest paid per annum = 2.5%

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