Ranbir borrows Rs.20,000 at 12% per annum compound interest. If he repays Rs.8400 at the end of the first year and Rs.9680 at the end of the second year, find the amount of loan outstanding at the beginning of the third year.

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4000

6000

5000

6200

answer is B.

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Detailed Solution

Given that ,
Ranbir borrowed Rs.20000 at 12% compound interest.
1st year:-
Interest =20000×1×12/100
             =Rs.2400
.
After one year, the amount will be
             = Rs.20000 + Rs.2400
             = Rs.22400
Money repaid by Ranbir = Rs.8400
∴ Balance = Rs.22400 − Rs.8400
                  = Rs.14000
2nd year:-
Interest =14000×1×12/100
             =Rs.1680
Thus, amount after second year              = Rs.14000 + Rs.1680
             = Rs.15680
Money repaid by Ranbir              = Rs.9680
Balance = Rs.15680 – Rs.9680               = Rs. 6000
Therefore,The amount of loan outstanding at the beginning of the third year               = Rs.6000

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