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Sum

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:

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

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#### Solution

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

Concept: Concept of Compound Interest

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