Multiple choice

A man borrowed a certain sum and agrees to repay it by paying Rs. 4000 at the end of first year and Rs. 7700 at the end of second year. If the rate of compound interest compounded annually is 10% per annum, then find the sum (in Rs.) borrowed.

  1. 9000

  2. 115000

  3. 11000

  4. 10000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be borrowed sum. After 1 year at 10%: amount = P × 1.1. Payment of 4000 leaves P × 1.1 - 4000. After 2nd year at 10%: amount = (P × 1.1 - 4000) × 1.1 = P × 1.21 - 4400. This equals 7700. So P × 1.21 = 12100, P = 10000.

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