Question

$A$ borrowed Rs. $2,500$ from $B$ at $12\%$ per annum at compound interest. After $2$ years, $A$ gave Rs. $2,936$ and a watch to $B$ to clear the account. Find the cost of the watch.

Answer 1

We know, for compound interest $A=P{\{1+\frac{R}{100}\}}^T$

Here $P=2500,R=12,T=2$

$A=2500{\{1+\frac{12}{100}\}}^2$

$A=2500\left\{\frac{112}{100}\right\}\left\{\frac{112}{100}\right\}=3136$

As per the question,

$A$ paid Rs. $2936$ and watch for settlement.

Therefore cost of watch $=3136-2936=$ Rs. $200$