Question

A man borrow Rs. 10,000 at 5% per annum compound interest. He repays 35% of the sum borrowed at the end of the first year and 42% of the sum borrowed at the end of the second year. How much must be pay at the end of the third year in order to clear the debt?

• A. Rs. 3,398.50
• B. Rs. 3,371.50
• C. Rs. 3,333.50
• D. Rs. 3,307.50

Answer 1

The correct option is D Rs. 3,307.50

For the first year

$P_1=10,000$,R=$5\%$

$A_1=10,000(1+\frac{5}{100})$

$=10000\times \frac{105}{100}$

$=Rs.10500$

At the end of the first year he repay 35$\%$ of the sum borrowed so he repay the amount$=10000\times \frac{35}{100}=Rs3500$

left amt$=10000-3500=Rs.7000$

For the second year

$P_2=Rs.7000$, R=5$\%$

$A_2=7000(1+\frac{5}{100})$

$=7000\times \frac{105}{100}$

$=Rs.7350$

At the end of the second year he repay 42$\%$ of the sum borrowed so he repay the amt=$10000\times \frac{42}{100}=Rs.4200$

Left amt$=7350-4200=Rs.3150$

For the Third year

$P_3=Rs.3150$, R=5$\%$

$A_3=3150(1+\frac{5}{100})$

$=3150\times \frac{105}{100}$

$=Rs.3307.50$

Hence he pay $Rs.3307.50$at the end of the third year in order to clear the debt.