Ratna obtained a loan of Rs 25000 from the Syndicate Bank to renovate her house.

Question:

Ratna obtained a loan of Rs 25000 from the Syndicate Bank to renovate her house. If the rate of interest is 8% per annum, what amount will she have to pay to the bank after 2 years to discharge her debt?

Solution:

Principal for the first year $=$ Rs. 25000

Interest for the first year $=$ Rs. $\left(\frac{25000 \times 8 \times 1}{100}\right)=$ Rs. 2000

Amount at the end of the first year $=$ Rs. $(25000+2000)=$ Rs. 27000

Principal for the second year $=$ Rs. 27000

Interest for the second year $=$ Rs. $\left(\frac{27000 \times 8 \times 1}{100}\right)=$ Rs. 2160

Amount at the end of the second year $=$ Rs. $(27000+2160)=$ Rs. 29160

Therefore, Ratna has to pay Rs. 29160 after 2 years to discharge her debt.

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