162.5 is the simple interest for one year.
What does the term "simple interest" mean?
The principal of a loan or the initial deposit into a savings account serves as the foundation for simple interest.
Simple interest doesn't compound, therefore a creditor will only charge interest on the principal sum, and a borrower will never be required to pay further interest on the interest that has already accrued.
P = $812.50
T = 1 Year
S.I. = ?
R = 20
According to question,
S.I. = P * R* T/100
= 812.50 * 20 * 1/100
= 16250/100
= 162.5
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