Question

A farmer took loan of Rs 20,000 from Nationalized Bank for his agricultural work. If bank charges interest on the rate of 14% yearly and the interest is compounded yearly. What is the total amount to be paid after 2 years and 6 months?

Answer 1

Loan amount = Rs 20,000

Rate of interest = 14% yearly

Time = 2 years 6 months

= 2 years + 6/12 year

= 5/2 years

Total Amount = Principal Amount + Interest

= 20,000 + 7,000

= Rs 27,000

Hence the total amount to be paid is Rs 27,000.