Question

A man borrows Rs$6,000$ at $5\%$ C.I. per annum . If he repays Rs$1,200$ at the end of the each year, find the amount of the loan outstanding at the beginning of the third year.

Answer 1

Given Principle amount $=$ Rs.$6000$

And Rate of interest $=r=5\%$ compounded annually

So,Interest after $1$ year $=6000\times 0.05=60\times 5=$ Rs $300$

Total money owed after $1$ year $=6000+300=6300$

And Rs.$1200$paid ,

So, Total money starting of second year $=6300-1200=$ Rs.$5100$

AndInterest after $2$ year $=5100\times 0.05=51\times 5=$Rs.$255$

Money owned after $2$ year $=5100+255=5355$

And Rs. $1200$ paid ,

So total money outstanding starting of Third year $=5355-1200=$ Rs.$4155$