Question

A man borrowed $Rs.1000$ to build a house. He pays $5\%p.a$ simple interest. He lets the house and receives a rent of $Rs.12.50$ per month. In how many years he is expected to clear the debt?

• A. $7$
• B. $15$
• C. $10$
• D. $8$

Answer 1

The correct option is C $10$

Amount borrowed $=Rs.1000$

Interest rate $=5\%$

Let us assume that it took him $x$ years to clear the debt all from the rent he received per month.

Rent received per month $=Rs.12.50$

$\Rightarrow$ Rent received per year $=Rs.150$

$\Rightarrow$ Rent received after $x$ years $=Rs.150x$

Amount to be paid back $=$ Amount borrowed $+$ Interest

$=1000+1000\times \frac{5}{100}\times x$

$\therefore 1000+50x=150x$

$x=10$ years