Question
A loan of ₹5,00,000 is taken at an interest rate of
10% per annum for 5 years with equal annual principal repayments. What is the total interest paid over the loan tenure?Solution
Principal repaid yearly = ₹5,00,000 / 5 = ₹1,00,000 Interest first year = 10% × ₹5,00,000 = ₹50,000 Second year interest = 10% × ₹4,00,000 = ₹40,000 Third year = ₹30,000 Fourth year = ₹20,000 Fifth year = ₹10,000 Total interest = ₹50,000 + ₹40,000 + ₹30,000 + ₹20,000 + ₹10,000 = ₹1,50,000
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