A person takes a loan of ₹4,000 for 3 years at 8% per annum compound interest. He repaid ₹2,000 in each of the first and second years. The amount he should pay at the end of the third year to clear all his debt is:

Correct option is C

Given:

Rate of interest = 8%

Time = 3year

Principle = ₹4,000

Repayment at end of first and second year = ₹2000 each

Formula Used:

Compounded Amount =$$Principle \times \left(1+ \frac{r}{100}\right)^{t}$$ 

where, t is time,  r is radius.

Solution:

Interest at end of first year:

Compounded Amount = $$4000 \times \left(1+ \frac{8}{100}\right)^{1}$$​

​$$= 4000\left(\frac{108}{100}\right)$$​

=₹4320

Amount remained after repayment = 4320-2000 = ₹2320

Compounded Amount = $$2320 \times \left(1+ \frac{8}{100}\right)^{1}$$​

​$$= 2320\left(\frac{108}{100}\right)$$​

= ₹2505.6

Amount remained after repayment: 2505.6 - 2000 = ₹505.6

Amount after 3^rd year will be:

Compounded Amount = $$505.6 \times \left(1+ \frac{8}{100}\right)^{1}$$​

= $$505.6\left(\frac{108}{100}\right)$$​

= ₹546.048

Total payment to be made at end of 3^rd year = ₹546.05