Question

A farmer, for purchasing seeds and fertilisers, borrowed a loan from a co-operative bank. After two years he paid 5434 and settled the account. If the rate of simple interest is 2 % per annum , what sum did he borrow ?​

Answer 1

Here,

• Rate of Interest = 2¼% p.a. = 9/4% p.a.
• Time = 2 year's
• Amount = Rs 5,434

Therefore,

• Principal + Simple Interest = Rs 5,434

=> P + (P × R × T/100) = Rs 5,434

=> P + (P × 9 × 2/4 × 100) = Rs 5,434

=> P + 9/200 P = Rs 5,434

=> 209/200 P = Rs 5,434

=> P = Rs 5,434 × 200/209

=> P = Rs 5,200

Hence:-

• The farmer borrowed Rs 5,200 from bank.