If the interest of a principal in `2` years be `(1)/(8)` of it, then find the rate of simple interest per annum.

Explanation

Let the principal `=Rs p` and rate of interest `=r%`
As per question, interest `=Rs pxx(1)/(8)=Rs (p)/(8)`
Time , `t=2` years
`:. Rs(p)/(8)=Rs(pxxrxx2)/(100)` [by formula]
or, `r=(100)/(2xx8)=(25)/(4)=6(1)/(4)`
Hence the required rate of simple interest per annum `=6(1)/(4)%`