Question

A man borrows Rs 4000 at 15% compound interest. At the end of each year, he pays back Rs 1500. How much additional amount is required to pay at the end of third year to clear all his dues:

Accepted Answer

D. Year 1 start: Rs 4000. End of Year 1 amount $= 4000 	imes 1.15 = 4600$. Repays Rs 1500 $\implies$ Balance $= 4600 - 1500 = 3100$. End of Year 2 amount $= 3100 	imes 1.15 = 3565$. Repays Rs 1500 $\implies$ Balance $= 3565 - 1500 = 2065$. End of Year 3 amount $= 2065 	imes 1.15 = 2374.75$. Repays Rs 1500, so additional amount needed $= 2374.75 - 1500 = 	ext{Rs. } 874.75$.

Compound Interest Dues Clearance

Explanation

Practise this under exam conditions