A 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 installments?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Rs.16,900
Given that
The amount is 50000 at a rate of 10% per annum compounded annually.
Amount after one year = 50000 * (11/10) = 55000
He paid 15000 installments from that then the remaining amount = 55000 - 15000 = 40000
Now, Payable Amount after 2nd year = 40000 * (11/10) = 44000
Remaining amount after 15000 installment paid = 44000 - 15000 = 29000
Now, the Payable Amount after 3rd year = 29000 *(11/10) = 319000
The remaining payable amount after the last installment of 15000 paid = 31900 - 15000 = 16900 Rs