Loan Repayment Reducing Balance
XAT 2012 · Quantitative Ability & Data Interpretation · Medium · Simple and Compound Interest
A man borrows 6000 at 5% interest, on reducing balance, at the start of the year. If he repays 1200 at the end of each year, find the amount of loan outstanding, in rupees, at the beginning of the third year.
- A.
3162.75
- B.
4125.00
- C.
4155.00
- D.
5100.00
- E.
5355.00
Answer
C
Explanation
- Year 1 start: 6000.
- Year 1 end interest: .
- Year 1 end total: 6300 - 1200 payment = 5100.
- Year 2 start: 5100.
- Year 2 end interest: .
- Year 2 end total: 5355 - 1200 payment = 4155. So at the beginning of the third year, outstanding loan = 4155.
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