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Question

A man borrows Rs. 8,500 at 10% compound interest. If he repays Rs, 2,700 at the end of each year, find the amount of the loan outstanding at the beginning of the third year.

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Solution

P1=Rs 8500,R=10%
For the first year
A1=8500(1+10100)
=8500×10100
=Rs9350
At the end of the year he repays Rs. 2700 then
The amount of loan for the second year
P2=A1repayamt
=93502700
=Rs.6650
A2=6650(1+10100)
=6650×110100
=Rs.7315
At the end of the year he repays Rs. 2700 then
The amount of loan for the third year
P3=A2repayamt
=73152700
=Rs.4615


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