Question

Thomas took out loan of 15000 rupees from a bank which charges 12% interest, compounded annually. After 2 years, he paid back 10000 rupees. To settle the loan, how much should he pay at end of three years?

Answer 1

Amount borrowed = 15000

Interest for the first year

= 15000 × \(\frac{12}{100}\) = 1800

Loan for the second year

= 15000 + 1800 = Rs.16800

Interest for the second year

= 16800 × \(\frac{12}{100}\) = 2016

Loan for the end of second year

= 16800 + 2016 = 18816

Amount payback at the end of second year = 10000

Loan for the third year

= 18816 – 10000 = 8816

Interest for the 3rd year

= 8816 × \(\frac{12}{100}\) = 1057.92

Amount to be repair at the end of third year

= 8816 + 1057.92 = Rs.9873.92