Question

A person bought a refrigerator worth Rs. 22,800 with 12.5% interest compounded yearly. At the end of first year he paid Rs. 8,650 and at the end of second year Rs. 9,125. How much will he have to pay at the end of third year to clear the debt?
1. Rs. 9,990
2. Rs. 10,000
3. Rs. 10,590
4. Rs. 11,250

Answer 1

Correct Answer - Option 4 : Rs. 11,250

Given:

Cost of the refrigerator = Rs.22, 800

Interest rate= 12.5 %

Amount paid at the end of the first year = Rs.8,650

Amount paid at the end of the second year = Rs.9,125

Calculation:

Cost of the refrigerator = Principal amount = Rs.22,800

Interest rate = 12.5%

After first year, interest = 12.5 % of Rs.22, 800 = Rs.2850

Principal amount remaining = Original Principal amount + Interest of first year - Amount  paid

⇒  22800 + 2850 - 8650

⇒  Rs.17000

After second year, interest = 12.5% of Rs.17,000 = Rs.2125

Principal amount remaining = Original Principal amount + Interest of second year - Amount  paid

⇒  17000 + 2125 - 9125

⇒  Rs. 10,000

After third year, interest = 12.5% of Rs.10,000 = Rs.1250

Amount to be paid too clear the debt = 10000 + 1250 = Rs.11,250

∴ Amount to be paid at the end of the third year is Rs.11, 250