Question

A Person takes a loan of Rs 2500
at 4% simple Interest He return
Rs 1500 at end of 1 year
What amount, he would pay to clear
his dues at the end of 2 years​

Answer 1

The person will pay back Rs 1144 at the end of the second year to clear out his loan with interest.

The person takes a loan of Rs 2500, hence the principal is 2500.

Rate of interest = $4\%=0.04$

Interest on the amount in 1 year is calculated using the simple interest formula:

$I=P\times R \times T$

using this formula we calculate :

$I=2500\times 0.04 \times 1\\\\or, I=100$

Therefore the amount of the loan with interest after 1 year is $2500+100=2600$

After 1 year he returns Rs 1500.

Therefore principal for the second year = $2600-1500=1100$

The rate remains constant, hence the interest of the second year is

$I=P\times R \times T\\\\or, I =1100\times 0.04\times 1\\\\or, I = 44$

Total amount due at the end of the second year = $1100+44=1144$ .

Therefore the person has to pay back a total of Rs 1144 at the end of the second year as calculated using simple interest.

Learn more about simple interest at:

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