Question

A sum of money was borrowed at 6% per annum
simple interest. At the end of first year 6800 was
paid off and the rate of interest on the balance was
reduced to 5% per annum. If the interest for the

second year was 11/20 of the interest for the first year
what was the original sum borrowed?​

Answer 1

Answer:

let the amount of money lent out be Rs. P

1st yr interest = PRT/100

=> P*6*1/100 = 0.06P

Amount to be returned = P + 0.06 P = 1.06 P

Amount returned = 6800

Balance Amount = 1.06P - 6800

2nd year interest = (1.06P - 6800) * 5 * 1/100

= (1.06 P - 6800) /20

Given,

2nd year interest,

11/20 of 1st year interest

11/20* 0.06 P

Now

(1.06 P - 6800) /20 = 11* 0.06 P/20

1.06P - 6800 = 11*0.06P

0.4P = 6,800

P = 17,000 (Ans)