Question

A man borrows Rs. 6,000 at 5% C.I. per annum. If he repays Rs. 1,200 at the end of each year, find the amount of the loan outstanding at the beginning of the third year.

Answer 1

Given that the amount borrowed = Rs. 6,000.

Rate per annum = 5%

Interest on Rs. 6,000 = `5/100` × Rs. 6,000 = Rs. 300

So, amount at the end of the first year = Rs. 6,000 + Rs. 300 = Rs. 6,300

Amount left to be paid = Rs. 6,300 - Rs. 1,200 = Rs. 5,100.

Interest on Rs. 5,100 = `5/100` × Rs. 5,100 = Rs. 255

So, amount at the end of the second year = Rs. 5,100 + Rs. 255 = Rs. 5,355.

Amount left to be paid = Rs. 5,355 - Rs. 1,200 = Rs. 4,155.

Hence, the amount of the loan outs tan ding at the beginning of the third year is Rs. 4,155.