Question : Sher Bahadur deposit a sum of money in a commerical bank at 9% per year annum. Answer the following questions. (I) what do you mean by the rate of 8% p.a? (ii) write the formula to calculate the simple interest. (iii) How much interest does she pay at the end of 2 years? (iv) How much amount should she pay at the end of 2years if she wants to clear the loan
Explanation:
(i) The statement "Sher Bahadur deposits a sum of money in a commercial bank at 9% per year annum" refers to Sher Bahadur putting money into a commercial bank as an investment or deposit. The rate of 9% per annum means that Sher Bahadur's investment will earn interest at a rate of 9% of the initial amount each year.
(ii) The formula to calculate simple interest is:
Simple Interest (SI) = Principal (P) × Rate (R) × Time (T) / 100
Where:
- Principal (P) is the initial amount deposited or borrowed.
- Rate (R) is the interest rate per period (usually per year).
- Time (T) is the time duration in years.
(iii) To calculate the interest Sher Bahadur pays at the end of 2 years, you'll need the principal amount, the interest rate, and the time:
Principal (P) = The initial sum of money deposited
Rate (R) = 9% per annum = 9/100
Time (T) = 2 years
Simple Interest (SI) = P × R × T / 100
(iv) To calculate the total amount Sher Bahadur should pay at the end of 2 years if she wants to clear the loan, you need to add the principal amount to the simple interest:
Total Amount = Principal + Simple Interest
Keep in mind that these calculations assume simple interest. If the interest is compounded (interest is calculated on both the initial principal and accumulated interest), the calculations will be different.