Question

Ranbir borrows Rs. 20,000 at 12% per annum compound interest. If he repays Rs. 8400 at the end of the first year and Rs. 9680 at the end of the second year, find the amount of loan outstanding at the beginning of the third year.

Answer 1

Given that Ranbir borrows Rs. 20000 at 12% compound interest.

For the first year,

Interest I = `(20000 xx 1 xx 12)/100`

= Rs. 2400

Thus, amount after one year = Rs. 20000 + Rs. 2400

= Rs. 22400

∴ Money repaid = Rs. 8400

∴ Balance = Rs. 22400 – Rs. 8400

= Rs. 14000

For the second year,

Interest I = `(14000 xx 1 xx 12)/100` 

= Rs. 1680

Thus the amount = Rs. 14000 + Rs. 1680

= Rs. 15680

Ranbir paid Rs. 9680 at the end of second year.

∴ Loan outstanding at the beginning of the third year Rs. (15680 – 9680) = Rs. 6000