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:**(i)** the amount at the end of the first year, before making the repayment.**(ii) **the amount at the end of the first year, after making the repayment.**(iii)** the principal for the second year.**(iv) **the amount to be paid at the end of the second year, to clear the account.

#### Solution

Sum borrowed = ₹12000

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

Time (T) = 2 years

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

`=(12000xx100xx1)/100`

= ₹1200

**(i) **Amount = ₹12000 + 1200 = ₹13200

Amount paid = ₹8000

**(ii) **balance amount = ₹13200 − 8000 = ₹5200

**(iii)** ∴ Principal for the second year = ₹5200

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

= ₹520

∴ Amount = ₹5200 + 520 = ₹5720