Question

Ramu borrowed Rs 15625 from a finance company to buy a scooter. If the rate of interest be 16% per annum compounded annually, what payment will he have to make after \[2\frac{1}{4}\] years?

Answer 1

Given: 
P = Rs 15, 625
R = 16 % p . a . 
\[n = 2\frac{1}{4} years\]
\[ \therefore\text{ Amount after }2\frac{1}{4}\text{ years = P }\left( 1 + \frac{R}{100} \right)^2 \left( 1 + \frac{\frac{1}{4}(R)}{100} \right)\]
\[ =\text{ Rs }15, 625 \left( 1 + \frac{16}{100} \right)^2 \left( 1 + \frac{\frac{16}{4}}{100} \right)\]
\[ =\text{ Rs }15, 625 \left( 1 . 16 \right)^2 \left( 1 . 04 \right)\]
\[ =\text{ Rs }21, 866\]
Thus, the required amount is Rs 21, 866.