Multiple choice

John borrowed ₹3,000 from Mohan at 10% p.a. for 3 years. At the end of each of the first two years, he paid ₹800 in total, which included that year's interest and part of the principal. At the end of the 3rd year, what amount must he pay to clear the remaining debt?

  1. Rs. 2,145

  2. Rs. 2,000

  3. Rs. 2,045

  4. Rs. 2,100

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Year 1: Interest = 3000 * 0.1 = 300. Payment 800 covers 300 interest, 500 principal. Balance = 2500. Year 2: Interest = 2500 * 0.1 = 250. Payment 800 covers 250 interest, 550 principal. Balance = 1950. Year 3: Interest = 1950 * 0.1 = 195. Total to pay = 1950 + 195 = 2145.

AI explanation

At the end of the first year, the interest is 10% of 3000 which is 300 rupees, so John has 500 rupees left after paying 800 rupees against his total debt of 3000 rupees. In the second year, the interest is 10% of the remaining 2500 rupees, totaling 250 rupees, leaving him with an outstanding principal of 1950 rupees after his 800 rupee payment. For the third year, the 10% interest on 1950 rupees is 195 rupees, making the final amount needed to clear the debt 1950 plus 195, which equals 2145 rupees.

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