A farmer borrowed ₹3600 at 15% per annum at simple interest. At the end of 4 years, he cleared his debt by paying ₹4000 and a cow. The cost of the cow is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹1760
To clear the debt the farmer must pay the amount, the principal plus the simple interest for 4 years. The cash and the cow together make up this amount, so the cow is worth the amount less the cash paid.
Simple interest for the 4 years \(\displaystyle =\frac{3600\times15\times4}{100}=2160\)
Amount due, principal plus interest \(=3600+2160=5760\)
Cost of the cow \(=5760-4000=1760\), that is, ₹1760