Sum

Prakash borrowed Rs 10,000 from Rajesh for 2 years at 6% and 8% p.a. compound interest for successive years. If Prakash returns Rs 5,600 at the end of the first year, how much does he have to give to Rajesh at the end of the second year to clear the loan?

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#### Solution

P = Rs. 10,000, R = 6 °/o p.a.

Interest for first year

`= ("Rs" 10000 xx 6 xx 1)/100`

= Rs600

Amount due after 1st year

=Rs. 10,000 +Rs. 600 =Rs 10,600

Amount paid after 1st year = Rs. 5,600

Balance amount = Rs. 10,600 - Rs. 5,600 =Rs. 5,000

Interest for second year when r = 8°/o p.a.

`= ("Rs" 5000 xx 8 xx 1)/100`

= Rs 400

Amount due after 2nd year

= Rs. 5,000 + Rs. 400

=Rs 5,400

Prakash has to return Rs 5,400 to Rajesh at the end of second year.

Concept: Concept of Compound Interest - Compound Interest as a Repeated Simple Interest Computation with a Growing Principal

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