A person takes a loan of Rs. 5000 at 5% simple interest. He returns Rs. 3000 at the end of one year.
How much he would have to pay, in order to clear his dues, at the end of 2 years?

Correct option is C

Given:
Principal = Rs. 5000
Rate = 5% per annum
Time = 2 years
Rs. 3000 is paid after 1 year
Solution:
Step 1: Calculate Interest for 1 Year on Rs. 5000
​$$\text{Simple Interest (SI)} = \frac{P \times R \times T}{100} \\= \frac{5000 \times 5 \times 1}{100} = 250$$​​
At the end of 1 year, the total due = Principal + Interest = 5000 + 250 = Rs. 5250

The person pays Rs. 3000
So, remaining balance = 5250 – 3000 = Rs. 2250

Step 2: Now calculate SI on Rs. 2250 for 1 more year
SI = (2250 × 5 × 1) / 100 = Rs. 112.50

Total amount to be paid at end of 2nd year = 2250 + 112.50 = Rs. 2362.50
Closest option is Rs. 2350
Correct Answer:
Option C – Rs. 2350

Note: This is a Previous year question.