Question

Verghese borrowed 16,000 rupees from a bank at 8% compound interest. After 2 years, the interest rate was lowered to 6%. What is the total amount that Verghese has to repay at the end of 3 years?

Answer 1

Principal, P = Rs.16000

Rate of interest for the first two years, R₁ = 8%

Rate of interest for the third year, R₂ = 6%

Total amount including interest =

∴ Total amount including interest for the first two years

Now, principal for the third year = Rs.18662.40

Total amount including interest

∴Amount to be repaid by Verghese at the end of 3 years = Rs.19782.14