A person borrows Rs. 16000 at the rate of 15% p.a. compounded annually. If he returns Rs. 4400, Rs. 5100 at the end of 1st year and 2nd year resp., then Find how much money he will return at the end of 3rd year to settle his loan.
Answer & explanation
Correct answer: option 1
For the 1st year:
Rate of interest = 15% = \(\frac{3}{20}\)
P = 20 → × 800 → 16,000
A = 20 + 3 = 23 → × 800 → 18,400
At the end of 1st year, he has to pay = 18, 400
Amount Paid = 4,400
Remaining amount = 14,000
For the 2nd year: → \(\frac{3}{20}\)
P = 20 → × 700 → 14,000
A = 23 → × 700 → 16,100
At the end of 2nd year, he has to pay = 16, 100
Amount Paid = 5,100
Remaining amount = 11,000
Now,
For the 3rd year: → \(\frac{3}{20}\)
P = 20 → × 550 → 11,000
A = 23 → × 550 → 12,650
At the end of 3rd year, he has to pay Rs. 12,650 to settle his loan.