Question

Peter borrows ₹ 12,000 for 2 years at 10% p.a. compound interest. He repays ₹ 8,000 at the end of the first year. Find:

1. the amount at the end of the first year, before making the repayment.
2. the amount at the end of the first year, after making the repayment.
3. the principal for the second year.
4. the amount to be paid at the end of the second year, to clear the account.

Answer 1

Sum borrowed = ₹ 12000

Rate (R) = 10% p.a. compound annually

Time (T) = 2 years

Interest for the first year =`"PRT"/100`

`=(12000xx10xx1)/100`

= ₹ 1200

(i) Amount = ₹ 12,000 + 1,200 = ₹ 13,200

Amount paid = ₹ 8,000

(ii) balance amount = ₹ 13,200 − 8,000 = ₹ 5,200

(iii) ∴ Principal for the second year = ₹5,200

(iv) Interest for the second year = `(5200xx10xx1)/100`

= ₹ 520

∴ Amount = ₹ 5200 + 520 = ₹ 5720