A person bought a refrigerator worth Rs. 22,800 with 12.5% interest compounded yearly. At the end of first year he paid Rs. 8,650 and at the end of second year Rs. 9,125. How much will he have to pay at the end of third year to clear the debt?
1. Rs. 9,990
2. Rs. 10,000
3. Rs. 10,590
4. Rs. 11,250
1. Rs. 9,990
2. Rs. 10,000
3. Rs. 10,590
4. Rs. 11,250
Correct Answer – Option 4 : Rs. 11,250
Given:
Cost of the refrigerator = Rs.22, 800
Interest rate= 12.5 %
Amount paid at the end of the first year = Rs.8,650
Amount paid at the end of the second year = Rs.9,125
Calculation:
Cost of the refrigerator = Principal amount = Rs.22,800
Interest rate = 12.5%
After first year, interest = 12.5 % of Rs.22, 800 = Rs.2850
Principal amount remaining = Original Principal amount + Interest of first year – Amount paid
⇒ 22800 + 2850 – 8650
⇒ Rs.17000
After second year, interest = 12.5% of Rs.17,000 = Rs.2125
Principal amount remaining = Original Principal amount + Interest of second year – Amount paid
⇒ 17000 + 2125 – 9125
⇒ Rs. 10,000
After third year, interest = 12.5% of Rs.10,000 = Rs.1250
Amount to be paid too clear the debt = 10000 + 1250 = Rs.11,250
∴ Amount to be paid at the end of the third year is Rs.11, 250