A man borrowed a certain sum and agrees to repay it by paying Rs.4000 at the end of the first year and Rs.7700 at the end of the second year. If the rate of compound interest compounded annually is 10% per annum, then find the sum (in ₹)
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e 10000.
Let the principal is P
P amounts to P(1 + 10/100)1 in 1 year
It is given that the man pays ₹4000 at the end of 1 year
Remaining Amount to pay = 1.1P - 4000
Now this (1.1P - 4000) becomes (1.1P - 4000)(1 + 10/100)1
⇒ (1.1P - 4000)(1.1) = 7700
⇒ 1.21P - 4400 = 7700
⇒ 1.21P = 12100
⇒ P = Rs.10000