Question

A borrowed Rs. 2,500 from B at 12% per annum compound interest. After 2 years, A gave Rs. 2,936 and a watch to B to clear the account. Find the cost of the watch.

Answer 1

For 1^st year,
P = Rs. 2500
R = 12%
T = 1 year

I = `[ 2500 xx 12 xx 1 ]/[ 100 ]` = Rs. 300.

Amount = 2500 + 300 = Rs. 2800

For 2^nd year,
P = Rs. 2800
R = 12%
T = 1 year

I = `[ 2800 xx 12 xx 1 ]/100` = Rs. 336

Amount = 2800 + 336 = Rs. 3136

Amount repaid by A to B = Rs. 2936

The amount of watch =Rs. 3136 - Rs. 2936 = Rs. 200