Question

Jethalal took a housing loan of Rs 2,50,000 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

Here, P = Rs 250000, R = 10 p.c.p.a., T = 5 years

∴ Yearly interest = Total interest ÷ Time = 1,25,000 ÷ 5 = Rs 25000

Total amount to be returned = Principal + Total interest 

= 250000 + 125000 = Rs 375000

∴ The yearly interest is Rs 25,000 and Jethalal will have to return Rs 3,75,000 to the bank.