Question

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

Answer 1

Correct Answer - Option 4 : 11250

Given:

Satish borrowed Rs.24000 at the rate of 12.5% compounded annually. At the end of 1^st 2^nd and 3^rd 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 1^st yr = 24000 × (1 + 1/8) = 27000

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

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

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

Amount of 3^rd yr= 16000 × 9/8 = 18000

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

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