Multiple choice

A man borrowed Rs.25000 from a bank at 20% compound interest. At the end of every year he paid 8000. At the end of the third year, he wanted to clear the loan. How much should he pay to clear the loan?

  1. 12400

  2. 16040

  3. 20800

  4. 22080
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Year 1: 25000 * 1.2 - 8000 = 22000. Year 2: 22000 * 1.2 - 8000 = 18400. Year 3: 18400 * 1.2 = 22080. He must pay 22080 to clear the balance.

AI explanation

At the end of the first year, the loan amount grows to 25000 * 1.2, which equals 30000, and after paying 8000 the balance is 22000. At the end of the second year, the balance grows to 22000 * 1.2, which equals 26400, and after paying 8000 the balance is 18400. At the end of the third year, this amount grows to 18400 * 1.2, which equals 22080.

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