Multiple choice

John borrowed Rs. 3000 from Mohan at a rate of 10% p.a simple interest for 3 years. At the end of the year, he paid the interest for that year and part of the loan, altogether Rs. 800. Similarly, he paid Rs. 800 at the end of the 2nd year. What sum must he pay now to clear off the debt?

  1. Rs. 2145

  2. Rs. 2060

  3. Rs. 2045

  4. Rs. 2100
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A Correct answer
Explanation

Year 1: Interest = 3000 * 0.10 = 300. Payment 800 covers 300 interest and 500 principal. Remaining principal = 2500. Year 2: Interest = 2500 * 0.10 = 250. Payment 800 covers 250 interest and 550 principal. Remaining principal = 1950. Year 3: Interest = 1950 * 0.10 = 195. Total to pay = 1950 + 195 = 2145.

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