Question

A man borrows ₹6,000 at 5% C.I. per annum. If he repays ₹1,200 at the end of each year, find the amount of the loan outstanding at the beginning of the third year.

Answer 1

Given, amount borrowed = ₹6,000 at R = 5%
C.I. per annum
So, Interest for the 1 st year = $\frac{5}{100}\times 6000$ = ₹300
And, the amount at the end of the first year will be = ₹(6,000 + 300) = ₹6,300
Given that an amount of ₹1,200 is repaid at the end of each year
Now, The amount left to the paid at the end of 1 st year = ₹(6,300 – 1,200) = ₹5,100
Then, the interest for the 2nd year is = $\frac{5}{100}\times 5100$ = ₹255
And, the amount will be = ₹(5100 + 255) = ₹5,355
Now, the amount left to be paid at the end of 2nd year after reduction of ₹1,200 will be = ₹(5,355 – 1,200) = ₹4,155
Hence, the amount of the loan outstanding at the beginning of the third year is ₹4,155