Question

Ramu borrowed $Rs.15625$ from a finance company to buy a scooter. If the rate of interest be $16\%$ per annum compounded annually, what payment he will have to make after $2\frac{1}{4}$ years?

Answer 1

Principal $\left(P\right)=Rs.15625$

Rate (R) $=16\%$

Period $=2\frac{1}{4}$ years.

Amount for $2$ years is given by

Amount $=P{(1+\frac{R}{100})}^2$

$=Rs.15625{(1+\frac{16}{100})}^2$
$=Rs.15625\times {\left(\frac{29}{25}\right)}^2$
$=Rs.15625\times \frac{29}{25}\times \frac{29}{25}$
$=Rs.21025$

Principal of next $\frac{1}{4}$ years, $P=Rs.21025$ [Amount till now]

Interest for $\frac{1}{4}$ years is given by

$I=\frac{P\times R\times T}{100}$

$=\frac{21025\times 16\times \frac{1}{4}}{100}$

$=Rs.841$

Total amount of $=2\frac{1}{4}$ years $=21025+841=Rs.21866$