On compound interest with periodic deductions or additions to the amount
22. A man borrows Rs 10,000 at a compound interest rate of 8% per annum. If he repays Rs 2,000 at the
end of each year, find the sum outstanding at the end of the third year.
Hence answer is
8104.32
Answers
Step-by-step explanation:
the first year:
Principal = $ 10,000
Rate = 8 %
Time = 1 year
Therefore, interest = $P×R×T100
= $10000×8×1100
= $80000100
= $ 800
Therefore, the amount of loan after 1 year = Principal + Interest
= $ 10,000 + $ 800
= $ 10,800
Ron pays back $ 2,000 at the end of the first year.
So, the new principal at the beginning of the second year = $ 10,800 - $ 2,000 = $ 8,800
Therefore, for the second year:
Principal = $ 8,800
Rate = 8 %
Time = 1 year
Therefore, interest = $P×R×T100
= $8,800×8×1100
= $70400100
= $ 704
Therefore, the amount of loan after 2 year = Principal + Interest
= $ 8,800 + $ 704
= $ 9504
Ron pays back $ 2,000 at the end of the second year.
So, the new principal at the beginning of the third year = $ 9504 - $ 2,000
= $ 7504
Therefore, for the third year:
Principal = $ 7504
Rate = 8 %
Time = 1 year
Therefore, interest = $P×R×T100
= $7504×8×1100
= $60032100
= $ 600.32
Therefore, the amount of loan (outstanding sum) after 3 year = Principal + Interest
= $ 7504 + $ 600.32
= $ 8104.32