Mr. Ravi borrows ₹ 16,000 for 2 years. The rate of interest for the two successive years are 10% and 12% respectively. If he repays ₹ 5,600 at the end of first year, find the amount outstanding at the end of the second year.

For first year :

P = ₹ 16,000

T = 1 year

R = 10 %

I = $\dfrac{P \times R \times T}{100}$

$= \dfrac{16000 \times 10 \times 1}{100}$ = ₹ 1,600.

Amount = P + I = ₹ 16,000 + ₹ 1,600 = ₹ 17,600.

Amount payed at end of first year = ₹ 5,600.

Amount left at beginning of second year = ₹ 17,600 - ₹ 5,600 = ₹ 12,000.

For second year :

P = ₹ 12,000

R = 12%

T = 1 year

I = $\dfrac{P \times R \times T}{100}$

$= \dfrac{12000 \times 12 \times 1}{100}$ = ₹ 1,440.

Amount = P + I = ₹ 12,000 + ₹ 1,440 = ₹ 13,440.

Hence, amount outstanding at end of second year = ₹ 13,440.