Question

An agricultural Co-operative society gives agricultural loan to its members at the rate of simple interest of 4% per annum. But interest is to be given at the rate of simple interest of 7.4% per annum for a loan taken from the bank. If a farmer being a member of the Co-operative Society takes a loan of ₹ 5000 from it instead of taking loan from the bank, then let us write, by calculating, the money to be saved as interest per annum.

Answer

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Principal = ₹ 5,000

Time = 1 yr

Rate (1st case )= 4 %

Rate (2nd case )= 7.4 %

Simple interest in the 1st case =\frac{\text { Prt }}{100}

= ₹ \frac{\text { 5000×4×1 }}{100}

= ₹ 200

Simple interest in the 1st case =\frac{\text { Prt }}{100}

= ₹ \frac{\text { 5000×7.4×1 }}{100}

= ₹ 370

Interest saved = ₹ 370 – ₹ 200 = ₹ 170

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