<p style="text-align: left;">Once there was a farmer who was desperately in need of money. He went to the zamindar of the village and asked him to lend a sum of ₹1 Lakh. The zamindar asked if the farmer could give any land or jewellery as collateral so he can lend him money against the collateral. The farmer agreed to give his home <img style="max-width: 100%; height: 330px; float: right;" src="https://static.vikaspedia.in/mediastorage/filestorage/20251219020052_Copilot_20251219_014531.png" alt="Uploaded Image" width="330">as collateral and borrow money.</p> <p style="text-align: left;">The Zamindar gave a loan of ₹100000 and told the farmer that he will be charging 12% interest. The farmer will have to repay the loan in 20 years by paying an EMI of ₹1101 every month.</p> <p style="text-align: left;">The farmer requested the zamindar to increase the period of loan and reduce the monthly EMI, because he could not pay ₹1101 every month. Then the Zamindar asked the poor farmer how much he could pay every month. The farmer told the zamindar that he could pay only ₹1000 per month and asked the zamindar to reduce ₹101 every month but increase the period of repayment.</p> <p style="text-align: left;">The zamindar was happy to reduce the EMI to ₹1000 every month and gave the farmer ₹1 Lakh after taking possession of his house. The farmer was also happy that he had to pay only ₹1000. The farmer thought that the repayment period would perhaps increase at the most by another 10 years.</p> <p style="text-align: left;"><strong>How long would it take the farmer to repay ₹1 Lakh?</strong></p> <p style="text-align: left;"> Since the interest rate was 12%, the annual interest on a ₹1 Lakh loan is ₹12000, and if the farmer can repay only ₹1000 per month, he repays only ₹12000 per year, which covers only the interest cost. The farmer could never pay back the principal and was indebted not only for his lifetime but also made his future generations indebted to the zamindar.</p> <p style="text-align: left;">The poor farmer could never get back his home and kept paying ₹1000 forever in his life and also generations to come.</p>