If a person earns $180 as simple interest on a principal of $1200 in 3 years, wh

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Question: If a person earns $180 as simple interest on a principal of $1200 in 3 years, what is the rate of interest?

Options:

Correct Answer: 5%

Solution:

Rate = (Interest * 100) / (Principal * Time) = (180 * 100) / (1200 * 3) = 5%.

If a person earns $180 as simple interest on a principal of $1200 in 3 years, what is the rate of interest?

If a person earns $180 as simple interest on a principal of $1200 in 3 years, what is the rate of interest?

Step 1: Identify the values given in the problem. The interest earned is $180, the principal amount is $1200, and the time period is 3 years.
Step 2: Use the formula for calculating the rate of interest: Rate = (Interest * 100) / (Principal * Time).
Step 3: Substitute the values into the formula: Rate = (180 * 100) / (1200 * 3).
Step 4: Calculate the denominator: 1200 * 3 = 3600.
Step 5: Calculate the numerator: 180 * 100 = 18000.
Step 6: Divide the numerator by the denominator: 18000 / 3600 = 5.
Step 7: The result is the rate of interest, which is 5%.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal × Rate × Time.
Rate of Interest – Determining the rate of interest from the simple interest earned, principal amount, and time period.