Interests L1

A person bought a refrigerator worth Rs. 22,800 with 12.5% interest compounded yearly. At the end of first year he paid Rs. 8,650 and at the end of second year Rs. 9,125. How much will he have to pay at the end of third year to clear the debt?

  1. Rs. 9,990
  2. Rs. 10,000 
  3. Rs. 10,590
  4. Rs. 11,250

Answer

Principal amount = Rs.22,800

Interest rate = 12.5%

After first year, interest = Rs.2850

So, principal = 22800 + 2850 - 8650 = Rs.17000

After second year, interest = 12.5% of Rs.17,000 = Rs.2125

So, principal = 17000 + 2125 - 9125 = Rs. 10,000

After third year, interest = 12.5% of Rs.10,000 = Rs.1250

Amount to be paid too clear the debt = 10000 + 1250 = Rs.11,250

The correct option is D.