Question

A man borrows Rs. 14000 at 25% compound interest. At the end of every year he pays Rs. 4000 as part of the repayment. How much does he still owe after three such instalments?

• A. Rs. 12875
• B. Rs. 13500
• C. Rs. 11117.1875
• D. Rs. 12093.75

Answer 1

The correct option is D Rs. 12093.75

At $25\%$ interest, the invested amount becomes $\to \text{P}(1+\frac{25}{100})=1.25\text{P}$

1st year:

Rs. 1$4000$ after calculating interest $=14000\times 1.25=\text{R}\text{s}.17500$

After repaying Rs. $4000$, he owes $\to 17500-4000=\text{R}\text{s}.13500$

2nd year:

Principal amount for second year $=\text{R}\text{s}.13500$

After calculating interest $=13500\times 1.25=\text{R}\text{s}.16875$

After repaying Rs. $4000$, he owes $\to 16875-4000=\text{R}\text{s}.12875$

3rd year:

Principal amount for second year $=\text{R}\text{s}.12875$

After calculating interest $=12875\times 1.25=\text{R}\text{s}.16093.75$

After repaying Rs. $4000$, he owes $\to 16093.75-4000=\text{R}\text{s}.12093.75$