Question

Jethalal took a housing loan of 2,50,000 rupees from a bank at 10 p.c.p.a for 5 years. What is the yearly interest he must pay and the total amount he returns to the bank?

Answer 1

Hint: Simple interest is the accumulated interest on the principal amount while the total amount accumulated in a defined time period is the sum of the principal amount and the interest accumulated on the principal amount. The formula used for the calculation of the simple interest is $ SI = \dfrac{{prt}}{{100}} $ where, $ p $ is the principal amount, $ r $ is the rate of interest annually (in percentage), and $ t $ is the time for which the interest to be determined (in years).
In this question, the principal amount, the rate of interest and the time is given so we will first find the interest after 5 years and then we need to find the total amount Jethalal has to pay after 5 years.

Complete step-by-step answer:
Given
The amount that Jethalal borrowed from the bank \[P = Rs.250000 \]
The interest rate at which the amount was borrowed \[r = 10 \% \]
Total time for which amount was borrowed \[t = 5 \]
Now as we know the simple interest on a sum of money is given by the formula
 $ SI = \dfrac{{prt}}{{100}} $
Hence by substituting the values in the given equation we get
 $
 \Rightarrow SI = \dfrac{{ \left( {250000 \times 10 \times 5} \right)}}{{100}} \ \
   = 2500 \times 50 \ \
   = 125000 \;
  $
So the yearly interest that Jethalal must pay $ = Rs.125000 $
Also the total amount that Jethalal need to return to the bank
 \[
 \Rightarrow A = S.I + P \ \
   = 125000 + 250000 \ \
   = Rs.375000 \;
  \]
So, the correct answer is “375000”.

Note: Students must not be confused with the loan amount and the principle amount because principle amount is the amount on which interest is to be calculated so in this case since interest is to be calculated on the loan amount so this amount will be principal amount.