A man borrowed a certain sum and agrees to repay it by paying ₹4000 at the end of first year and ₹7700 at the end of second year. If the rate of compound interest compounded annually is 10% per annum, then find the sum (in ₹) borrowed.
Answer & explanation
Correct answer: option 2
10% = \(\frac{1 }{10}\)
Ratio of Sum and amount for 2nd year = 10 : 11
ATQ,
11R = 7700
1R = 700
So , Sum left after 1st year = 10R = 10 × 700 = 7000
Total amount at end of 1st year = 7000 + 4000 = 11000
Now ,
Ratio of initial sum and amount after 1st year = 10 : 11
ATQ ,
11R = 11000
1R = 1000
Initial invested sum = 10R = 10 ×1000 = 10000