Question

A loan of Rs. 10,000 is charged at 12% simple interest per annum. Rs. 4,000 is repaid after 6 months and the balance is repaid after 1 year. Find the total interest paid.

Solution

1. Interest on Rs. 10,000 for the first 6 months = 10,000 x 12 x 1/2 / 100 = Rs. 600.
2. After repaying Rs. 4,000, the balance is Rs. 6,000.
3. Interest on Rs. 6,000 for the next 6 months = 6,000 x 12 x 1/2 / 100 = Rs. 360.
4. Total interest = 600 + 360 = Rs. 960.