Question

Nishtha took a loan for Rs. 1,00,000 at $9\% $p.a. for 3 years on simple interest. Calculate the amount payable by Nishtha after 3 years.

Answer 1

Hint:
We have the principal amount, rate of interest and number of years. Using this we can find the interest to be paid using the equation of simple interest, which is given by $I = P \times N \times R$. Then we can add the interest with the principal amount to get the total amount payable after 3 years.

Complete step by step solution:
We are given the principal amount is Rs 1,00,000. So, we can write,
$ \Rightarrow P = 1,00,000$
Then the rate of interest is given as $9\% $ . So, we can write,
$ \Rightarrow R = 9\% $
We can convert it into fraction,
$ \Rightarrow R = \dfrac{9}{{100}}$
The number of years is given as 3.
$ \Rightarrow N = 3$
We know that simple interest is given by the equation, we get,
$ \Rightarrow I = P \times N \times R$
On substituting the values, we get,
$ \Rightarrow I = 1,00,000 \times 3 \times \dfrac{9}{{100}}$
On simplification, we get,
$ \Rightarrow I = 1000 \times 3 \times 9$
On multiplication we get,
$ \Rightarrow I = 27,000$
So, the interest for 3 years for the given amount is Rs. 27000.
To find the amount to be paid, we can add the interest with the principal amount.
$ \Rightarrow A = P + I$
On substituting the values, we get,
$ \Rightarrow A = 100000 + 27000$
On adding we get,
$ \Rightarrow A = 127000$

Therefore, the amount to be paid at the end of the 3 years is Rs. 1,27,000.

Note:
After finding the interest amount, we must add it with the principal amount to get the required value. We must use only the equation for simple interest and not the compound interest. We must convert the rate of interest into fraction before substituting in the equation.
Interest is the amount that a borrower needs to pay additional to the borrowed money to the lender. Simple interest is the interest for the principal amount. For a compound interest, the interest is calculated for the principal amount along with the interest of the previous years.