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Question

# Kamala borrowed Rs 26,400 from a Bank to buy a scooter at a rate of 15% p.a. compounded yearly. What amount will she pay at the end of 2 years and 4 months to clear the loan? (Round answer to nearest whole number)

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Solution

## Principal (P) = Rs26,400Rate (R) = 15% per annumNumber of years (n) = 2412The amount for 2 years and 4 months can be calculated by first calculating the amount for 2 years using the compound interest formula, and then calculating the simple interest for 4 months on the amount obtained at the end of 2 years.For calculating amount of first 2 years,Amount = Principal(1+R100)TimeInterest = Amount - PrincipalAmount = 26400(1+15100)2Amount=34914Now, the interest for next 13 years will be calculated using Simple InterestS.I. = (P×R×T)100S.I. = 34914×15×13100S.I. = 1745.70Therefore, total amount to be paid after 2 years and 4 months = 34,914+1,745.70=Rs 36,659.70Nearest whole number to 36659.70 is 36660.

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