A farmer took a loan of ₹30,000 from a bank at an annual compound interest rate of 10% to buy seeds and fertilizers. At the end of the first year, he repaid ₹12,000. At the end of the second year, he repaid ₹10,000. How much does he need to pay at the end of the third year to clear his loan? (Give your answer in integer rupees.)
(a) ₹ 14410
(b) ₹ 14800
(c) ₹ 14000
(d) ₹ 2000

Question

A farmer took a loan of ₹30,000 from a bank at an annual compound interest rate of 10% to buy seeds and fertilizers. At the end of the first year, he repaid ₹12,000. At the end of the second year, he repaid ₹10,000. How much does he need to pay at the end of the third year to clear his loan? (Give your answer in integer rupees.)
(a) ₹ 14410
(b) ₹ 14800
(c) ₹ 14000
(d) ₹ 2000

ONLiNE UPSC · Accepted Answer

After 1st Year
Principal = ₹30,000
Amount after 1 year = ₹30,000 &times; 1.10 = ₹33,000
Payment made = ₹12,000
Remaining = ₹33,000 - ₹12,000 = ₹21,000
After 2nd Year
Amount after 2nd year = ₹21,000 &times; 1.10 = ₹23,100
Payment made = ₹10,000
Remaining = ₹23,100 - ₹10,000 = ₹13,100
After 3rd Year
Amount after 3rd year = ₹13,100 &times; 1.10 = ₹14,410

Hence, option a is correct.

Compound Interest

Loan repayment with compound interest

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M Question 1	⏱ 0
A farmer took a loan of ₹30,000 from a bank at an annual compound interest rate of 10% to buy seeds and fertilizers. At the end of the first year, he repaid ₹12,000. At the end of the second year, he repaid ₹10,000. How much does he need to pay at the end of the third year to clear his loan? (Give your answer in integer rupees.) (a) ₹ 14410 (b) ₹ 14800 (c) ₹ 14000 (d) ₹ 2000