Mathematics
A man borrows ₹6000 at 5% compound interest. If he repays ₹1200 at the end of each year, find the amount outstanding at the beginning of the third year.
Compound Interest
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Answer
Principal for first year = ₹6000, rate = 5%.
Interest for first year = = ₹300.
Amount after first year = ₹6000 + ₹300 = ₹6300.
Money refunded at the end of first year = ₹1200.
Principal for second year = ₹6300 - ₹1200 = ₹5100.
Interest for second year = = ₹255.
Amount after second year = ₹5100 + ₹255 = ₹5355.
Money refunded at the end of second year = ₹1200.
Principal for third year = ₹5355 - ₹1200 = ₹4155.
Hence, the amount outstanding at the beginning of third year = ₹4155.
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