Multiple choice

Himanshu borrowed Rs. 15000 as a loan for two years with compound interest 20% compounded annually. After 1 year, he pays Rs. 12000. What is the principal amount for the next year?

  1. Rs. 6000

  2. Rs. 7500

  3. Rs. 1500

  4. Rs. 18000
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A Correct answer
Explanation

Initial amount = 15000. After 1 year at 20% interest, the amount becomes 15000 * 1.2 = 18000. He pays 12000, so the remaining principal for the next year is 18000 - 12000 = 6000.

AI explanation

Using the compound interest formula, the amount due after the first year is the principal of Rs. 15000 plus 20% interest, which equals Rs. 18000. Himanshu pays Rs. 12000 at the end of the first year. The new principal for the next year is the remaining balance, calculated as 18000 minus 12000. The principal amount for the next year is Rs. 6000.

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