Convert percentage rate

Convert the mixed fraction $12 \frac{1}{2}\%$ to a decimal or improper fraction: $R = 12.5\% = \frac{25}{2}\% = 0.125$

$R = 0.125$

Express Amount in terms of Principal

The amount $A$ is the sum of Principal $P$ and Simple Interest $SI$. Since $SI = P \times R \times t$, then $A = P(1 + R \times t)$. Given $t = 2$:

$8250 = P(1 + 0.125 \times 2) = P(1.25)$

Calculate Principal

Solve for $P$: $P = \frac{8250}{1.25} = 6600$

$P = 6600$

Calculate Simple Interest for 1 year

The interest for 1 year is $SI_1 = P \times R \times 1$:

$SI_1 = 6600 \times 0.125 = 825$