Question

A man borrows Rs. 8,000 at 10% compound interest payable every six months. He repays Rs. 2,500 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. 3879.57
• B. 3879.75
• C. 3879.76
• D. 3879.89

Answer 1

Answer: (B)

3879.75

For 1st six months : $P=Rs.8,000;R=10\%$ and $T=\frac{1}{2}year$
$\therefore$ Interest$=Rs.\frac{8000\times 10\times 1}{100\times 2}=Rs.400$
And, amount $=Rs.8000+Rs.400=Rs.8,400$
$\because$ Money repaid $=$ Rs. 2,500
$\therefore$ Balance $=Rs.8,400-Rs.2,500=Rs.5,900$
For the 2nd six months : $P=Rs.5,900;R=10\%$ and $T=\frac{1}{2}year$
$\therefore$ Interest $=Rs.\frac{5,900\times 10\times 1}{100}=Rs.295$
And, amount $=$$Rs.5,900+Rs.259$=$ Rs. 6,195
Again, momey repaid = Rs. 2,500
$\Rightarrow$ Balance $=Rs.6,195-Rs.2,500=Rs.3,695$
$\therefore$ Interest $=Rs.\frac{3,695\times 10\times 1}{100\times 2}Rs.184.75$
And, amount $=Rs.3,695+Rs.184.75=Rs.3,879.75$
$\therefore$ The 3rd instalment to be made to clear the entire loan = Rs. 3,879.75 (Ans.)