Pranav borrows a sum of ₹6,23,305 at the rate of 10% per annum simple interest. At the end of the first year, he repays ₹16,390 towards return of principal amount borrowed. If Pranav clears all pending dues at the end of the second year, including interest payment that accrued during the first year, how much does he pay (in ₹) at the end of the second year?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 7,29,937
The initial principal amount borrowed is ₹6,23,305, and the interest rate is 10% per annum. The interest for the first year = SI = (P⋅R⋅T)/100
⇒ SI (Year 1) = (6,23,305 ⋅10⋅1)/100 = 62,330.50
At the end of the first year, Pranav repays ₹16,390 towards the principal amount.
Thus, the remaining principal (after Year 1) = 6,23,305 − 16,390 = 6,06,915
In the second year, interest is calculated on the remaining principal (6,06,915):
SI (Year 2) = (6,06,915⋅10⋅1)/100 = 60,691.50
Total Payment = 6,06,915 + 62,330.50 + 60,691.50 = 7,29,937