Question

A farmer, for purchasing seeds and fertilisers, borrowed a loan from a co-operative bank. After two years he paid $Rs5434$ and settled the account. If the rate of simple interest is $2\frac{1}{4}\%$ per annum, what sum did he borrow?'

Answer 1

Given that,

Amount $\left(A\right)=Rs.5434$

Time $\left(T\right)=2$ years

Rate of interest $\left(R\right)=2\frac{1}{4}$ % $=\frac{9}{4}$ %

Principle $\left(P\right)=?$

$\because A=P(1+\frac{TR}{100})$

$⟹5434=P(1+\frac{2\times 9}{4\times 100})$

$⟹5434=P(1+\frac{9}{200})$

$⟹5434=P\left(\frac{209}{200}\right)$

$⟹P=5434\times \frac{200}{209}=26\times 200=5200$

$\therefore$ Sum borrowed $=Rs.5200$