The amount of simple interest on a deposit of Rs 8, 500 for 3 years is Rs 2,040. Find the rate of interest per annum.

Options

A. `8%`
B. `8.5%`
C. `9%`
D. `7.5%`

Answer

To find the rate of interest per annum, we will use the formula for Simple Interest (SI):

**Step 1: Write down the formula for Simple Interest.**
The formula for Simple Interest is:
\[ \text{SI} = \frac{P \times R \times T}{100} \]
Where:
- SI = Simple Interest
- P = Principal amount (initial deposit)
- R = Rate of interest per annum
- T = Time in years

**Step 2: Substitute the known values into the formula.**
From the question, we know:
- SI = Rs. 2040
- P = Rs. 8500
- T = 3 years

Substituting these values into the formula:
\[ 2040 = \frac{8500 \times R \times 3}{100} \]

**Step 3: Simplify the equation.**
First, we can multiply both sides by 100 to eliminate the fraction:
\[ 2040 \times 100 = 8500 \times R \times 3 \]
\[ 204000 = 25500R \]

**Step 4: Solve for R.**
Now, divide both sides by 25500 to isolate R:
\[ R = \frac{204000}{25500} \]

**Step 5: Calculate the value of R.**
Now we perform the division:
\[ R = 8 \]

**Step 6: State the final answer.**
The rate of interest per annum is:
\[ R = 8\% \]

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