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A financial company claims that it charges only 20% interest on loans. .But if a person takes out a loan of 100 rupees , he would get only 80 rupees,after subtracting the annual interest of 20 rupees at the outset.And he has to pay back 100 rupees after one year. What is their actual rate of interest? explain in detail.
Amount of loan got = Rs. 80
        Amount to be repaid after one year =  Rs.100
        Interest for one year = 100 - 80 = Rs. 20
        Rate of interest              

        Though they claim yearly rate of interest to be 20% actually it is 25%.


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