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Question
Ranbir borrows Rs. 20,000 at 12% per annum compound interest. If he repays Rs. 8400 at the end of the first year and Rs. 9680 at the end of the second year, find the amount of loan outstanding at the beginning of the third year.
Solution
Given that Ranbir borrows Rs. 20000 at 12% compound interest.
For the first year,
Interest I = `(20000 xx 1 xx 12)/100 = Rs 2400`
Thus,amount after one year = Rs. 20000 + Rs. 2400 Rs. 22400
∴ Money repaid = Rs 8400
∴ Balance = Rs 22400 - Rs 8400 = Rs 14000
For the second year
Interest I = `(14000xx1xx12)/100 = Rs 1680`
Thus the amount = Rs 14000 + Rs 16800 = Rs 15680
Ranbir paid Rs. 9680 at the end of second year.
∴ Loan outstanding at the beginning of the third year Rs. (15680 9680) = Rs. 6000
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