Question : A man borrowed Rs. 50,000 from a bank at 10% per annum, compounded annually. At the end of every year, he pays Rs. 15,000 as part payment of the loan and interest. How much does he still owe to the bank after three such instalments?
Option 1: Rs. 16,900
Option 2: Rs. 15,800
Option 3: Rs. 15,200
Option 4: Rs. 16,200
Correct Answer: Rs. 16,900
Solution :
At the end of the first year,
The remaining amount = (50000 × 1.1) – 15000 = 55000 – 15000 = Rs. 40000
At the end of the second year,
The remaining amount = (40000 × 1.1) – 15000 = 44000 – 15000 = Rs. 29000
At the end of the third year,
The remaining amount = (29000 × 1.1) – 15000 = 31900 – 15000 = Rs. 16900
So, after three such instalments, he still owes the bank Rs. 16,900.
Hence, the correct answer is Rs. 16,900.
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