A man borrowed some money and agreed to pay-off by paying Rs 3150 at the end of the 1st year and Rs 4410 at the end of the 2nd year. If the rate of compound interest is 5% per annum, then the sum is:
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. Rs. 7000
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Understanding |
Application |
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Suppose the sum = Rs. X Interest rate is 5% per annum compounded annually. |
So, Amount after 1 year = 1.05X |
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He pays Rs. 3150 after 1 year. |
So, Remaining sum = (1.05X – 3150) |
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Principal for 2nd year = (1.05X – 3150) |
He pays Rs. 4410 after 2nd year. So, (1.05X – 3150) × 1.05 = 4410 ⇒ (1.05X – 3150) = 4200 ⇒ 1.05X = 7350 ⇒ X = 7000 So, Sum = Rs. 7000 |