To find the rate of interest, we can use the simple interest formula:

$I = P \times r \times t$

Where:

• $I$ is the interest paid,
• $P$ is the principal (amount borrowed),
• $r$ is the rate of interest,
• $t$ is the time period in years.

Given:

• $I = 53.98$ (interest paid),
• $P = 500$ (amount borrowed),
• $t = 5$ months, which is $\frac{5}{12}$ years.

Now we can solve for the rate $r$:

$r = \frac{I}{P \times t}$

Substituting the values:

$r = \frac{53.98}{500 \times \frac{5}{12}}$

Now let's compute this.The rate of interest is approximately 25.91%.

Would you like more details or have any questions?

Here are some related questions:

1. How is simple interest different from compound interest?
2. How would the interest rate change if the borrowing period were longer?
3. What would be the interest if the loan amount were doubled?
4. How do we calculate interest for different time periods, such as days or weeks?
5. What would the monthly interest payments be if the interest was paid monthly?

Tip: Always convert time to years when using the simple interest formula unless the rate is given for another time period (e.g., months).