Question

Calculate the amount that needs to be repaid at the end of 3 years if a sum of 20, 000 is borrowed on simple interest for the first year and on compound interest for the next 2 years, with the rate of interest in both the cases being 8% p.a.

Answer 1

Calculate the amount that needs to be repaid at the end of 3 years if a sum of 20, 000 is borrowed on simple interest for the first year and on compound interest for the next 2 years, with the rate of interest in both the cases being 8% p.a.

Principal = 20,000

Time = 3 year

Rate = 8% p.a

S.I = 20000×8×1 / 100

= 1600

Now calculating compound interest

C.I = -20000+20000(1+8/100)²

C I = 3328

Hence total repaid

= 20000+1600+3328

= ₹ 24938