To calculate the simple interest, we use the formula:

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

Where:

• $P$ is the principal amount (Rs 20,000)
• $R$ is the rate of interest per annum (5% per annum)
• $T$ is the time period in years (3 months = $\frac{3}{12} = \frac{1}{4}$ years)

Now, substitute the values into the formula:

$\text{SI} = \frac{20000 \times 5 \times \frac{1}{4}}{100}$

Simplify:

$\text{SI} = \frac{20000 \times 5 \times 1}{4 \times 100}$

$\text{SI} = \frac{100000}{400} = 250$

The simple interest earned is Rs 250.

Would you like more details or have any questions?

Here are some related questions:

1. How would the interest change if the rate of interest were increased to 10%?
2. How is simple interest different from compound interest?
3. What would be the interest if the investment was for 6 months?
4. How is the principal amount related to the interest earned?
5. What happens to the simple interest if the time period is doubled?
6. How do you calculate the total amount after earning simple interest?
7. What is the impact of a higher principal amount on the interest?
8. How can you calculate interest for different time periods (days, months, years)?

Tip: When dealing with months in simple interest calculations, always convert the time into years to ensure accurate results.