Question

A man borrows $Rs.1,200$ at rate $10$ percent per annum compound interest. If he repays $Rs.250$ at the end of each year, find the amount outstanding at the beginning of the fourth year.

• A. $Rs.769.70$
• B. $Rs.796$
• C. $Rs.799.70$
• D. $Rs.777.70$

Answer 1

The correct option is A $Rs.769.70$

$A=P{(1+\frac{R}{100})}^T$
$A=1200(1+\frac{10}{100})\Rightarrow 1200\times \frac{110}{100}\Rightarrow 1320$
According to question, borrower paid $Rs250$ per year
Then borrowed amount for second year is $Rs.1320-250=Rs.1070$
$A=1070(1+\frac{10}{100})\Rightarrow 1070\times \frac{110}{100}\Rightarrow 1177$
Then borrowed amount for third year is $Rs.1177-250=Rs.927$
$A=927(1+\frac{10}{100})\Rightarrow 927\times \frac{110}{100}\Rightarrow Rs.1019.70$
Borrowed amount for fourth year is $Rs.1019.70-250=Rs.769.70$

Hence, option A.