Question

Kamala borrowed Rs 26400 from a Bank to buy a scooter at a rate of 15% p.a. compounded yearly. What amount will she pay at the end of 2 years and 4 months to clear the loan?

(Hint: Find A for 2 years with interest is compounded yearly and then find SI on the 2^nd year amount for 4/12 years.)

Answer 1

Principal (P) = Rs 26,400

Rate (R) = 15% per annum

Number of years (n) = 2 4/12 years

The amount for 2 years and 4 months can be calculated by first calculating the amount for 2 years using the compound interest formula, and then calculating the simple interest for 4 months on the amount obtained at the end of 2 years. Firstly, the amount for 2 years has to be calculated.

A = Rs [26400 (1 + 15/100)²] 

= Rs [26400 (1 + 3/20)²]

= Rs [26400(20 + 3/20)²]

= Rs (26400 x 23/20 x 23/20)

= Rs 34914

By taking Rs 34,914 as principal, the S.I. for the next 1/3 years will be calculated.

S.I = Rs [(34914 x 1/3 x15)/100] 

= Rs (34914 x 5/100)

= Rs 1745.70

Interest for the first two years = Rs (34914 − 26400) = Rs 8,514

And interest for the next 1/3 year = Rs 1745.70

Total C.I. = Rs (8514 + Rs 1745.70) = Rs 10,259.70

Amount = P + C.I. = Rs 26400 + Rs 10259.70 = Rs 36,659.70