Question

Thomas took out loan of 15000 rupees from a bank which charges 12% interest, compounded annually. After 2 years, he paid back 10000 rupees. To settle the loan, howmuch should he pay at end of three years?

Answer 1

Amount borrowed $=15000$
Interest for the first year
$$=15000\times \frac{12}{100}=1800$$
Loan for the second year
$=15000+1800=$ Rs. 16800
Interest for the second year
$$=16800\times \frac{12}{100}=2016$$
Loan for the end of second year
$$=16800+2016=18816$$
Amount payback at the end of second year $=10000$
Loan for the third year
$=18816-10000=8816$
Interest for the 3rd year
$$=8816\times \frac{12}{100}=1057.92$$
Amount to be repair at the end of third year
$$=8816+1057.92=\text{Rs.}9873.92$$