Question

25. A man borrows Rs 5,000 at 12% compound interest per annum, interest payable every 6 months.
He pays back Rs 1,800 at the end of every six months. Calculate the third payment he has to make
at the end of 18 months in order to clear the entire loan.
ICSE 2002​

Answer 1

Principal for the first six months = Rs.5000.

Interest for the first six months = Rs.(5000 × 6 × 1)/100 = Rs.300.

Amount after six month = Rs.5000 + Rs.300 = Rs.5300.

Money refunded after six months = Rs.1800.

Principal for the second six months = Rs.5300 – Rs.1800 = Rs.3500.

Interest for the second six months = Rs.(3500 × 6 × 1)/100 = Rs.210.

Amount after second six months = Rs.3500 + Rs.210 = Rs.3710.

Money refunded after second six months = Rs.1800.

Principal for the third six months = Rs.3710 – Rs.1800 = Rs.1910.

Interest for the third six months = Rs.(1910 × 6 × 1)/100 = Rs.114.60.

Hence payment he has to make after 18 months to clear the entire loan

= Rs.1910 + Rs.114.60 = Rs.2024.60