Question

A man borrows rs. 4000 from a bank at 7 1/2 % compound interest. At the end of every year, he pays rs. 1500 as part repayment of loan and interest. How much does he still owe to the bank after three such instalments ?



a.Rs.123.25



b.Rs.125



c.Rs.400



d.Rs.469.18

Answer 1

Answer:

d. Rs.469.18

Step-by-step explanation:

As given in question,

Principal amount, P = Rs. 4000

Rate of interest, r = 7.5%

                             = 0.075

Time. t = 3 years

Since, the man takes the loan on compound interest so, the total amount at the end of 3 years can be given by

$A\ =\ P(1+r)^t$

    $=\ 4000(1+0.075)^3$

    $=\ 4000(1.075)^3$

    = Rs. 4969.18

hence, the total amount of money after 3 years will be Rs. 4969.18.

As he pays Rs. 1500 every year so at the end of 3 years he will be able to pay 3 x 1500 = 4500

So, the amount left to pay the bank = 4969.18 - 4500

                                                           = Rs. 469.18

So, he still owe Rs. 469.18 to the bank.