At what rate would a sum of N100.00 deposited for 5 years raise an interest of N7.50?

Analyze the question: We need the rate (R) at which a principal of N100 earns simple interest of N7.50 in 5 years.

Concept: Simple interest formula:

I = (P × R × T) / 100

so R = (I × 100) / (P × T)

Solution:

• P = N100
• T = 5 years
• I = N7.50

R = (7.50 × 100) / (100 × 5)

R = 750 / 500

R = 1.5%

Check: (100 × 1.5 × 5) / 100 = 7.5 ✓

Answer: The rate is 1.5%, which matches option C.

Tip: When P = 100, the formula simplifies to I = R × T. So R = I ÷ T = 7.5 ÷ 5 = 1.5. Spotting that P = 100 saves you time in the exam.