Question

A man borrows Rs.8000 at 4% per annum compound interest, compounded yearly, and
repays Rs.2320 at the end of each year. Find the amount outstanding at the end of the third
year.

Answer 1

Answer :

₹3,920

Explanation :

Principal 8,000 compounded annually at the rate of 4%

So,

Interest for the first year :

→ p × r × t/100

→ 8,000 × 4 × 1/100

→ 80 × 4

→ 320

∴ Amount for the first year = 8,000 + 320 = ₹8,320.

Since, ₹2320 is paid at the end of every year.

∴ Principal for the 2nd year :

= 8,320 - 2,320

= ₹6,000

So on, interest after the 2 years :

→ p × r × t/100

→ 6,000 × 4 × 1/100

→ 60 × 4

→ 240

∴ Amount for the 2nd year = 6,000 + 240 = ₹6,240

∴ Total money outstanding after 3 years is :

→ Amount of the 2nd year - Paid amount

→ 6,240 - 2,320

→ 3,920

Required answer : ₹3,920