Question

A man borrowed Rs.16,000 for 3 years under the following terms:
20% simple interest for the first 2 years.
20% C.I. for the remaining one year on the amount due after 2 years, the interest being compounded half-yearly.
Find the total amount to be paid at the end of the three years.

Answer 1

For the first 2 years

S.I. = `[ "P" xx "N" xx "R"]/100`

⇒ S.I. = `[ 16,000 xx 2 xx 20 ]/100` ⇒ S.I. = 6,400

Amount = S.I. + P 
⇒  Amount = 6,400 + 16,000 = Rs. 22,400

Amount in the account at the end of the two years is Rs.22,400.
For the remaining one year

A = `P( 1 + r/[ 2 xx 100 ])^( n xx 2)`

⇒ A = `22,400( 1 + 20/200 )^2`

⇒ A = `22,400( 11/10 )^2`

⇒ A = 27,104

The total amount to be paid at the end of the three years is Rs. 27,104.