Question

A man borrows ₹5000 at 12 % compound interest payable every six months. He repays ₹1800 at the end of every six months. Calculate the third payment he has to make at the end of 18 months in order to clear the entire loan.

• A. ₹2024.60
• B. ₹2014
• C. ₹1800
• D. ₹2042

Answer 1

The correct option is A

₹2024.60

T = $\frac{1}{2}$ years

I = $\frac{5000\times 12\times 1}{100\times 2}$
= ₹300
Amount = 5000 + 300 = ₹1800
Money repaid = ₹1800
Balance = 5300 - 1800
= ₹3500

For the second six months : P = ₹3500 , R = 12 % and T = $\frac{1}{2}$ years
I = $\frac{3500\times 12\times 1}{100\times 2}$
= ₹210
Amount = 3500 + 210 = ₹3710
Again Money repaid = ₹1800
Balance = 3710 - 1800
= ₹1910

For the last six months :
P = ₹1910 , R = 12 % and T = $\frac{1}{2}$ years

Interest = $\frac{1910\times 12\times 1}{100\times 2}$
= ₹114.60

Amount = 1910 + 114.60
= ₹2024 . 60

Hence the third instalment will be ₹2024.60 to clear the loan.