Question

A man borrows Rs.10,000 at 10% compound interest compounded yearly. At the end of each year, he pays back 20% of the amount for that year. How much money is left unpaid just after the second year ?

Answer 1

For 1^st year :

P = Rs. 10,000; R = 10% and T = 1 year

Interest = Rs. `[10,000 xx 10 xx 1]/100` = Rs. 1,000

Amount at the end of 1^st year = Rs. 10,000 + Rs. 1,000 = Rs. 11,000

Money paid at the end of 1^st year = 20% of Rs. 11,000 = Rs. 2,200

∴ Principal for 2^nd year = Rs. 11,000 - Rs. 2,200 = Rs. 8,800

For 2^nd year :

P = Rs. 8,800; R = 10% and T= 1 year

Interest = Rs. `[8,800 xx 10 xx 1]/[100]`= Rs. 880

Amount at the end of 2^nd year = Rs. 8,800 + Rs. 880 = Rs. 9,680

Money paid at the end of 2^nd year = 20% of Rs. 9,680 = Rs.1,936

∴ Principal for 3^rd year =Rs. 9,680 - Rs. 1,936 = Rs. 7,744.