Multiple choice

Rohit took a loan of Rs 20000 to purchase a LCD TV set from a finance company. He promised to make the payment after three years. The company charges compound interest at the rate of 10% per annum for the same. Suddenly the company announced the rate of interest as 15% per annum for the last one year of the loan period. What extra amount will Rohit pay due to this announcement of the new rate of interest?

  1. Rs 7830

  2. Rs 4410

  3. Rs 1210

  4. Rs 6620
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Original amount after 3 years at 10% is 20000 * (1.1)^3 = 26620. New amount is 20000 * (1.1)^2 * 1.15 = 27830. The difference is 27830 - 26620 = 1210.

AI explanation

Calculate the amount after the first two years using the Compound Interest formula: Amount equals 20000 x (11/10) x (11/10), which is Rs. 24200. For the third year, the extra interest paid due to the 5% rate increase is 5% of this accumulated amount, so 24200 x (5/100) equals Rs. 1210.

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