#### Question

Ranbir borrows Rs. 20,000 at 12% per annum compound interest. If he repays Rs. 8400 at the end of the first year and Rs. 9680 at the end of the second year, find the amount of loan outstanding at the beginning of the third year.

#### Solution

Given that Ranbir borrows Rs. 20000 at 12% compound interest.

For the first year,

Interest I = `(20000 xx 1 xx 12)/100 = Rs 2400`

Thus,amount after one year = Rs. 20000 + Rs. 2400 Rs. 22400

∴ Money repaid = Rs 8400

∴ Balance = Rs 22400 - Rs 8400 = Rs 14000

For the second year

Interest I = `(14000xx1xx12)/100 = Rs 1680`

Thus the amount = Rs 14000 + Rs 16800 = Rs 15680

Ranbir paid Rs. 9680 at the end of second year.

∴ Loan outstanding at the beginning of the third year Rs. (15680 9680) = Rs. 6000

Is there an error in this question or solution?

#### APPEARS IN

Solution Ranbir Borrows Rs. 20,000 at 12% per Annum Compound Interest. If He Repays Rs. 8400 at the End of the First Year and Rs. 9680 at the End of the Second Year, Find The Amount of Loan Outstanding at the Beginning of the Third Year. Concept: Use of Compound Interest in Computing Amount Over a Period of 2 Or 3-years.