Question

Rohit took a loan of Rs 20000 to purchase a LCD TV set from a finance company. He promised to make the payment after three years. The company charges compound interest at the rate of 10% per annum for the same. Suddenly the company announced the rate of interest as 15% per annum for the last one year of the loan period. What extra amount will Rohit pay due to this announcement of the new rate of interest?

• A. Rs 7830
• B. Rs 4410
• C. Rs 1210
• D. Rs 6620

Answer 1

The correct option is C Rs 1210

The loan taken by Rohit $=Rs20000$.

Original rate $=10$. Time $=3yrs$.

$\therefore$ The original amount should have been paid

=Principal$\times {(1+rate)}^{time}$

$=20000Rs{(1+\frac{10}{100})}^3=Rs26620.$.

But he paid an interest @ 10% for 2yrs.

$\therefore$The amount after 2yrs.

$=20000Rs{(1+\frac{10}{100})}^2=Rs24200.$.

Now he pays 15% interest for 1yr.

$\therefore$ The amount after 1yr.

$=24200\times Rs(1+\frac{15}{100})=Rs27830.$.

So, the extra amount Rohit has to pay

$=Rs(27830-26620)=Rs1210$.