Multiple choice

A man borrowed Rs.50,000 from a bank at 10% per annum, compounded annually. At the end of every year, he pays Rs.15,000 as part payment of the loan and interest. How much does he still owe to the bank after three such instalments?

  1. Rs.16,900

  2. Rs.15,800

  3. Rs.15,200

  4. Rs.16,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

After year 1: 50000 + 10% interest = 55000, minus 15000 payment = 40000. After year 2: 40000 + 10% = 44000, minus 15000 = 29000. After year 3: 29000 + 10% = 31900, minus 15000 = 16900. The outstanding amount after 3 years is Rs. 16,900.

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