Multiple choice

A man borrows Rs. 4,000 at 15% compound interest. At the end of each year, he pays back Rs. 1,500. How much amount is required to pay at the end of third year to clear all his dues?

  1. Rs. 775.75

  2. Rs. 973.85

  3. Rs. 1,500

  4. Rs. 874.75
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Year 1: 4000 * 1.15 - 1500 = 3100. Year 2: 3100 * 1.15 - 1500 = 2065. Year 3: 2065 * 1.15 = 2374.75. After paying 1500 at the end of the third year, the remaining amount is 2374.75 - 1500 = 874.75.

AI explanation

At the end of year one, the loan amount grows to 4000 * 1.15 = Rs. 4600, and after paying Rs. 1500, the remaining principal is Rs. 3100. At the end of year two, this grows to 3100 * 1.15 = Rs. 3565, leaving Rs. 2065 after the second payment of Rs. 1500. At the end of year three, this remaining balance grows to 2065 * 1.15 = Rs. 2374.75; subtracting the final Rs. 1500 payment leaves an outstanding balance of Rs. 874.75 required to clear all dues.

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