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

This problem involves calculating the rate of simple interest using the formula I = PRT/100.

• First, calculate the simple interest (I): Amount (A) - Principal (P) = Rs. 15,500 - Rs. 12,500 = Rs. 3,000.
• Next, use the formula I = PRT/100, where I = 3000, P = 12500, T = 4 years, and R is the rate of interest we need to find.
• Substitute the values: 3000 = (12500 * R * 4) / 100.
• Simplify: 3000 = (125 * R * 4).
• Further simplify: 3000 = 500 * R.
• Solve for R: R = 3000 / 500 = 6%.
• Option D: 6% is the correct rate of interest.
• Options A, B, and C are incorrect as they would yield different interest amounts when calculated using the simple interest formula.