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Question
Peter borrows ₹ 12,000 for 2 years at 10% p.a. compound interest. He repays ₹ 8,000 at the end of the first year. Find:
- the amount at the end of the first year, before making the repayment.
- the amount at the end of the first year, after making the repayment.
- the principal for the second year.
- the amount to be paid at the end of the second year, to clear the account.
Solution
Sum borrowed = ₹ 12000
Rate (R) = 10% p.a. compound annually
Time (T) = 2 years
Interest for the first year =`"PRT"/100`
`=(12000xx10xx1)/100`
= ₹ 1200
(i) Amount = ₹ 12,000 + 1,200 = ₹ 13,200
Amount paid = ₹ 8,000
(ii) balance amount = ₹ 13,200 − 8,000 = ₹ 5,200
(iii) ∴ Principal for the second year = ₹5,200
(iv) Interest for the second year = `(5200xx10xx1)/100`
= ₹ 520
∴ Amount = ₹ 5200 + 520 = ₹ 5720
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