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.