A sum of ₹10,000 is taken as a loan by Rajesh at a rate of 15% p.a. simple interest for 2 years. But Rajesh could not repay it at the agreed time and asked for an extension of two more years. So, the lender included the interest amount for the period as principal for the next two years at the same rate of interest. The total amount paid by Rajesh at the end of 4 years is:
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. ₹16,900.
Interest = (P × R × T)/100 = (10000 × 15 × 2)/100 = ₹3,000
The lender adds the interest of ₹3,000 to the principal for the next 2 years.
Now, the total amount (P1) = ₹10,000 + ₹3,000 = ₹13,000
So, total interest = (P1 × R × T)/100 = (13000 × 15 × 2)/100 = ₹3,900
Total amount needs to be paid = ₹13000 + ₹3900 = ₹16900
Therefore, the total amount paid by Rajesh at the end of 4 years is ₹16900.