A financial company claims that it charges only 20% interest on loans.

1.	A financial company claims that it charges only 20% interest on loans. But if a person takes out a loan of Rs 100 he would get only Rs 80, after subtracting the annual interest of rupees 20 at the outset. And he has to pay back Its 100 after 1 year. How much is their real interest?
Answer» A borrower gets only Rs 80 when he borrows Rs 100 He has to repay Rs 100. ie. Rs.20 as additional. Real interest \(\frac{20}{80}\times100\) = 25%

A financial company claims that it charges only 20% interest on loans. But if a person takes out a loan of Rs 100 he would get only Rs 80, after subtracting the annual interest of rupees 20 at the outset. And he has to pay back Its 100 after 1 year. How much is their real interest?

Answer»

A borrower gets only Rs 80 when he borrows Rs 100

He has to repay Rs 100.

ie. Rs.20 as additional.

Real interest

\(\frac{20}{80}\times100\) = 25%