Question
Download Solution PDFA man borrowed Rs. 50,000 from a bank at 10% per annum, compounded annually. At the end of every year, he pays Rs. 15,000 as part payment of the loan and interest. How much does he still owe to the bank after three such instalments?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Type = Compound
Principle = Rs. 50,000
Rate = 10%
I = Rs.15,000
Formula used:
A = P x [1 + (R /100)]T
A = CI + P
here,
A = Amount
CI = Compound Interest
P = Principle
R = Rate
T = Time
Solution:
The amount he owes at the end of 1st year = 50,000 x 1.1 - 15,000 = 55000 - 15000 = Rs. 40,000
Now, P = 40,000
The amount he owes at the end of 2nd year = 40,000 x 1.1 - 15,000 = 44000 - 15000 = Rs. 29,000
Now, P = 29,000
The amount he owes at the end of 3rd year = 29,000 x 1.1 - 15,000 = 31900 - 15000 = Rs. 16,900
Hence, the correct option is 1.
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