Ramesh borrowed some money and agreed to pay-off by paying Rs.4,565 at the end of the first year and Rs.6,534 at the end of the second year. If the rate of compound interest is 10% per annum, find the amount borrowed by Ramesh.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Rs. 9,550.
Given that
At the end of first year, Ramesh paid 4565 Rs
Rate of interest: 10%
Time = 1 year
As we know,
Amount = Sum (1 + rate/100)time
⇒ 4565 = Sum (1 +10/100)
⇒ 4565 = Sum (11/10)
⇒ Sum = 4150 Rs
Now, at the end of second year, he paid Rs 6534
⇒ Rate = 10% and time = 2 year
⇒ 6534 = Sum (1 + 10/100)2
⇒ 6534 = Sum (121/100)
⇒ Sum = 5400 Rs
Hence, the amount borrowed by Ramesh = 4150 + 5400 = Rs 9550