Question

Rakesh borrowed ₹60,000 at 12% per annum compound interest. If he pays 50% of the sum borrowed at the end of the first year and 50% of the remaining loan at the end of the second year, then find the amount of loan outstanding at the beginning of the third year.

Answer 1

Given, P = ₹60,000 and R = 12

For the first year:

I = $\frac{PTR}{100}$

= $\frac{60,000\times 1\times 12}{100}$

= ₹7,200

Given that he pays off 50% of the amount borrowed.
Hence amount paid back by him
= 50% of 60,000
= ₹30,000

For the second year:

Principal = 30,000 + 7,200

= ₹37,200

I = $\frac{PTR}{100}$

= $\frac{37200\times 1\times 12}{100}$

= ₹4,464

Actual amount due at the beginning of the third year
= 37,200 + 4,464
= ₹41,664

Given that he pays off 50% of the remaining borrowed sum.
50% of 30,000 = ₹15,000

Hence the total amount due at the beginning of the third year
= 41,664 - 15,000
= ₹26,664