Question

Vilasrao borrowed ₹20000 from a bank at a rate of 8 p.c.p.a. What is the amount he will return to the bank at the end of the year?

Answer 1

Let us suppose that the interest on the principal of ₹20000 is x.

On principal ₹100, the interest is ₹8.

We shall take the ratio of interest to principal, write it in two forms and obtain an equation.

$\frac{x}{20000}=\frac{8}{100}$

$x=\frac{8}{100}\times 20000=1600$

Amount to be returned to the bank = principal + interest = 20000 + 1600 = ₹ 21600