Kunal took a loan at 8% per annum simple interest for 3 years and repaid Rs 22940 in all, including interest. What was the amount of the loan?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs 18500
The repayment is the loan plus the interest, so it equals the loan multiplied by \(\displaystyle 1+\frac{rt}{100}\).
Interest for 3 years \(=8\times3=24\%\) of the loan
Repayment \(=124\%\) of the loan \(=22940\)
Loan \(\displaystyle =\frac{22940\times100}{124}=18500\)
The loan was Rs 18500.
Why the other options are incorrect
Option (1) Rs 18000 — Incorrect. Interest on Rs 18000 for 3 years at 8% is Rs 4320, so the repayment would be Rs 22320, not Rs 22940.
Option (2) Rs 17500 — Incorrect. Interest on Rs 17500 for 3 years at 8% is Rs 4200, so the repayment would be Rs 21700, not Rs 22940.
Option (4) Rs 19500 — Incorrect. Interest on Rs 19500 for 3 years at 8% is Rs 4680, so the repayment would be Rs 24180, not Rs 22940.