Mr. Ali borrows RS. 500 from bank for a period of 4 years. If interest rate is 11% per anum, what would be the amount of interest he has to pay back in addition to the principal amount?
Answer: Rs. 220
Explanation
To calculate the interest, you can use the formula:
Interest = Principal × Rate × Time
In this case:
Principal (P) = Rs. 500
Rate (R) = 11% per annum = 0.11
Time (T) = 4 years
Interest = 500 × 0.11 × 4 = Rs. 220
So, Mr. Ali has to pay back the principal amount of Rs. 500 plus the interest of Rs. 220, making a total of Rs. 720.
The correct answer is: Rs. 220
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