Explanation:

To solve the problem, we need to find the time it takes for the interest to become three-eighths (3/8) of the principal amount when the annual interest rate is 5%.

- Formula Used:

- Simple Interest (SI) = Principal (P) × Rate (R) × Time (T) / 100

- We need SI = (3/8) × P

- Steps:

- Set up the equation: (3/8) × P = P × 5 × T / 100

- Solve for T:

- (3/8) = (5/100) × T

- T = (3/8) × (100/5)

- T = 7.5 years

- Conversion:

- 0.5 years = 6 months

- So, T = 7 years 6 months

- Evaluation of Options:

- Option 2: 7 years 6 months – Correct!

- Final Statement:

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