Question

Say what is the principal, the interest and the period in each of the following examples:

(1) Rehmanbhai borrowed Rs 25,000 from a bank. After 3 years, he returned Rs 32,500 to the bank which included both the loan and the interest.

(2) Maniben took a loan of Rs 8000 from the Women's Co-operative Society and returned an amount of Rs 8480 to the society after six months.

(3) Manoharpant borrowed Rs 6,00,000 from a national bank to buy a house. After five years, he paid back his entire debt by returning an amount of Rs 8,40,000 to the bank.

Answer 1

The amount borrowed from the bank is called principal. The total amount that has to be paid back to the bank after a specific time period is called amount.
Also,
Interest = Amount − Principal
Using the following information, we can calculate the following parts:

(1) Principal = Rs 25000
Amount = Rs 32500
Interest = Rs 32500 − Rs 25000 = Rs 7500
Because Rehmanbhai returns the amount after three years, the time period is three years.

(2) Principal = Rs 8000
Amount = Rs 8480
Interest = Rs 8480 − Rs 8000 = Rs 480
Because Maniben returns the amount after six months, the time period is six months.


(3) Principal = Rs 600000
Amount = Rs 840000
Interest = Rs 840000 − Rs 600000 = Rs 240000
Because Manoharpant returns the amount after five years, the time period is five years.