Question

A man borrows $ 5,000 at 12% compound interest payable every six months . He repays $ 1,800 at the end of every six months . Calculate the third payment he has to make at end of 18 months in order to clear the entire loan.

Answer 1

Answer:

For the first year

P=Rs5,800

N=

2

1

year

R=12 %

We have S.I.=

100

PNR

=

100

5,800×

2

1

×12

=Rs348

And Amount at the end of first 6 months P+S.I.=Rs5,800+Rs348=Rs6,148

Now, for the second half year

P=Rs6,148−Rs1,800=Rs4,348

N=

2

1

year

R=12 % We have S.I.=

100

PNR

=

100

4,348×

2

1

×12

=Rs260.88

And Amount at the end of second half - year P+S.I.=Rs4,348+Rs260.88=Rs4,608.88

Also, for the third half year

P=Rs4,608.88−Rs1,800=Rs2,808.88

N=

2

1

year

R=12 %

We have S.I.=

100

PNR

=

100

2,808.88×

2

1

×12

=Rs168.5328

And Amount at the end of third half - year P+S.I.=Rs2,808.88+Rs168.5328=Rs2977.4128 or approximately Rs2977

And after the third payment amount outstanding =2977.4128−1,800=Rs1177.4128 or approximately Rs1177

Answer 2

Answer:

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