A man borrow RS.6000 at 5% C.I. per annum. If he repays RS.1200 at end of each year, find the amount of the loan outstanding at the beginning of the third year.

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Solution

Given Principle amount = Rs . 6000
And
Rate of interest = r = 5% compounded annually
So,
Interest after 1 year = (6000 × 5 × 1)/100 = 60× 5 = Rs 300
Total money owed after 1 year = 6000 + 300 = 6300
And
Rs. 1200 paid ,
So
Total money starting of second year = 6300 - 1200 = Rs.5100
And
Interest after 2 year = (5100 × 5 × 1)/100 = 51× 5 = Rs . 255
money owned after 2 year = 5100 + 255 = 5355
And
Rs. 1200 paid ,
So
Total money outstanding starting of Third year = 5355 - 1200 = Rs.4155 ( Ans )

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