Question
Download Solution PDFA person borrows Rs. 1,00,000 from a bank at 10% per annum simple interest and clears the debt in five years. If the installment paid at the end of the first, second, third and fourth years to clear the debt are Rs. 10,000, Rs. 20,000, Rs. 30,000 and Rs. 40,000, respectively, what amount should be paid at the end of the fifth year to clear the debt?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
A person borrows Rs. 1,00,000 from a bank at 10% per annum simple interest and clears the debt in five years.
The installment paid at the end of the first, second, third, and fourth years to clear the debt are Rs. 10,000, Rs. 20,000, Rs. 30,000, and Rs. 40,000
Concept used:
S.I = (P × T × R)/100
Here,
P = Principle
T = Time
R = Rate
Calculation:
1st year interest = 100000 × 10% = 10000
Principal amount after 1st year = 100000 - 10000 = 90000
2nd year interest = 90000 × 10% = 9000
Principal amount after 2nd year = 90000 - 20000 = 70000
3rd year interest = 70000 × 10% = 7000
Principal amount after 3rd year = 70000 - 30000 = 40000
4th year interest = 40000 × 10% = 4000
Principal amount after 4th year = 40000 - 40000 = 0
At the end of the fifth year, the person has to pay the total interest remaining:
Total Interest = 10000 + 9000 + 7000 + 4000 = 30000
So, the person should pay Rs. 30,000 at the end of the fifth year to clear the debt.
Last updated on Jun 13, 2025
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