A person borrows Rs. 1,00,000 from a bank at 10% per annum simple interest and clears the debt in five years. If the instalment 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?
A. Rs. 38,250
B. Rs. 39,490
C. Rs. 40,450
D. Rs. 36,450
Answer: Option B
Solution(By Examveda Team)
$$\eqalign{ & {\text{Interest at the end of }}{{\text{1}}^{{\text{st}}}}{\text{ year}} \cr & = \frac{{1,00,000 \times 10}}{{100}} \cr & = 10,000 \cr & {\text{Paid amount}} = 10,000 \cr & {\text{Rest amount}} \cr & = 1,10,000 - 10,000 \cr & = 1,00,000 \cr & {\text{Interest for }}{{\text{2}}^{{\text{nd}}}}{\text{ year}} = 10,000 \cr & {\text{Amount paid}} = 20,000 \cr & {\text{Remaining amount}} \cr & = 1,10,000 - 20,000 \cr & = 90,000 \cr & {\text{Interest for }}{{\text{3}}^{{\text{rd}}}}{\text{ year}} = 9,000 \cr & {\text{Amount paid}} = 30,000 \cr & {\text{Remaining amount}} \cr & = 99,000 - 30,000 \cr & = 69,000 \cr & {\text{Interest for }}{{\text{4}}^{{\text{th}}}}{\text{ year}} = 6,900 \cr & {\text{Amount paid}} = 40,000 \cr & {\text{Remaining amount}} \cr & = 75,900 - 40,000 \cr & = 35,900 \cr & {\text{Interest for }}{{\text{5}}^{{\text{th}}}}{\text{ year}} \cr & = \frac{{35,900 \times 10}}{{100}} \cr & = 3,590 \cr & {\text{Amount paid at the end of }}{{\text{5}}^{{\text{th}}}}{\text{ year}} \cr & = 35,900 + 3,590 \cr & = 39,490 \cr} $$Join The Discussion
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But this is wrong .You are using concept of Compound Interest. You must have to subtract installments from principal. For getting the right answer you are totally breaking the rule ..Wow Clap for your hardwork !! 🤞