Ratna obtained a loan of Rs. 25000 from the Syndicate Bank to renovate her house. If the rate of interest is 8% per annum, what amount will she have to pay to the bank after 2 years to discharge her debt?
Present value = Rs.25000
Interest rate = 8% per annum
Time = 2 years
Amount (A) = P (1 + R/100)n [Where, P = Present value
R = Annual interest rate
n = Time in years]
∴ A = 25000 (1 + 8/100)2
⇒ A = 25000 (108/100)2
⇒ A = 25000 (1.08)2
⇒ A = 25000 × 1.1664
⇒ A = 29160
∴ Amount = Rs.29160