Question

Rs. 8,000 is lent out at 7% compound interest for 2 years. At the end of the first year Rs. 3,560 are returned. Calculate :
(i) the interest paid for the second year.
(ii) the total interest paid in two years.
(iii) the total amount of money paid in two years to clear the debt.

Answer 1

(i) For 1^st year : 
P = Rs. 8,000; R = 7 % and T = 1 year

Interest = Rs. `[ 8,000 xx 7 xx 1 ]/[100]` = Rs. 560.

Amount = Rs. 8,000 + Rs. 560 = Rs. 8,560
Money returned = Rs. 3,560
Balance money for 2^nd year= Rs. 8,560 - Rs. 3,560 = Rs. 5,000

For 2^nd year :
P = Rs. 5,000; R = 7 % and T = 1 year.

Interest paid for the second year = Rs. `[ 5,000 xx 7 xx 1 ]/100` 
= Rs. 350

(ii) The total interest paid in two years= Rs. 350 + Rs. 560 = Rs. 910

(iii) The total amount of money paid in two years to clear the debt

= Rs. 8,000+ Rs. 910 = Rs. 8,910