If simple interest incurred on a certain sum of money after 2.5 years at 3(1/4)% rate of interest per annum is $390, then what is the value of the sum?

Ops: A. $7,000

B. $4,800

C. $4,900

D. $2,100

To solve the problem, we can use the formula for simple interest:

\[
\text{Simple Interest (SI)} = \frac{P \times R \times T}{100}
\]

Where:
- $ P $ is the principal amount (the sum of money to be found),
- $ R $ is the rate of interest per annum (3.25% in this case),
- $ T $ is the time in years (2.5 years in this case),
- SI is the simple interest ($390 in this case).

Substituting the known values:

\[
390 = \frac{P \times 3.25 \times 2.5}{100}
\]

To find $ P $, rearrange the formula:

\[
P = \frac{390 \times 100}{3.25 \times 2.5}
\]

Now, calculate the value of $ P $:

\[
P = \frac{390 \times 100}{8.125} = \frac{39000}{8.125} \approx 4800
\]

So, the value of the sum $ P $ is **$4,800**.

The correct answer is **B. $4,800**.

Would you like further details on the calculation or have any other questions?

Here are 8 related questions for practice:

1. What would be the interest if the rate were 5% instead of 3.25%?
2. How would the principal change if the time period was 5 years instead of 2.5 years?
3. If the interest incurred was $780 at the same rate and time, what would be the principal?
4. What is the formula for compound interest, and how does it differ from simple interest?
5. How much time would it take to earn $390 at 3.25% interest with a principal of $2,400?
6. What would be the new interest if the rate of interest was halved?
7. How would the interest change if the time period was doubled?
8. If $4,800 is invested at 3.25% interest compounded annually for 2.5 years, what would be the final amount?

**Tip:** Always ensure to keep units consistent throughout your calculations, especially when dealing with rates and time.

Learn how to calculate simple interest on a principal amount of $390 at an annual rate of 3.25% over a period of 2.5 years. Detailed step-by-step solution provided.

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