A sum of ₹16,875 was lent out at simple interest, and at the end of 1 year 8 months, the total amount was ₹18,000. Find the rate of interest per annum.

Given parameters:
Principal (P) = ₹16,875

Amount (A) = ₹18,000

Time (T) = 1 year 8 months=1+
12
8
​
 years=1+
3
2
​
 years=
3
5
​
 years

First, calculate the Simple Interest (SI):

SI=A−P=18000−16875=₹1,125
The formula for simple interest is:

SI=
100
P×R×T
​

Substitute the known values to find Rate (R):

1125=
100
16875×R×
3
5
​

​

1125=
100
5625×5×R
​

1125=
100
28125×R
​

R=
28125
1125×100
​

Simplifying the fraction:

R=
28125
112500
​
=4%
Thus, the rate of interest per annum is 4%.