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Satish borrowed Rs. 24000 at the rate of 12.5% compounded annually. At the end of 1st 2nd and 3rd years he paid Rs. 7000, Rs. 6500 and Rs. 8000 respectively. if Satish wanted to clear his loan at the end of 4th year, what would he pay at the end of fourth year to clear his loan?
1. 10600
2. 10500
3. 11760
4. 11250

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Correct Answer - Option 4 : 11250

Given:

Satish borrowed Rs.24000 at the rate of 12.5% compounded annually. At the end of 1st 2nd and 3rd years he paid Rs.7000, Rs.6500 and Rs.8000 respectively.

Formula:

Amount under simple interest = P × r × t/100

Amount under compound interest = P (1 + r/100)t,

where P is principle, r is rate of interest and t is time

Calculation:

Amount of 1st yr = 24000 × (1 + 1/8) = 27000

At end of 1st year = 27000 - 7000 = Rs.20000

Amount of 2nd yr = 20000 × 9/8 = 22500

At the end of 2nd year = 22500 - 6500 = Rs.16000

Amount of 3rd yr= 16000 × 9/8 = 18000

At the end of 3rd year = 18000 - 8000 = Rs.10000

Amount of 4th yr = 10000 × 9/8 = Rs.11250

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