A man borrows Rupees 10,000 at 8% p.a. simple interest for 2 years. He repays Rupees 10,000 at the end of two years and the balance at the end of the third year. How much (in Rupees) did he repay at the end of the third year? A. 600 B. 1600 C. 160 D. 0
ANSWER
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Hint: The total time period for the loan will be 2 years. Here, we will use the formula of simple interest $\dfrac{P\times R\times T}{100}$ to find the amount the man repaid by the end of three years.
Complete step-by-step answer: It is given in the question that the man borrows Rupees 10,000 at 8% p.a. simple interest for 2 years. So, we will use a direct formula of simple interest to find the amount of interest that the man has to pay in three years. The principle amount = Rupees 10,000 and total time period = 2 years. Then, simple interest (SI) $=\dfrac{P\times R\times T}{100}$ $=\dfrac{10000\times 8\times 2}{100}$ = Rupees 1600. Thus, the man has to pay extra Rupees 1600 as interest in the third year as it is given in the question that the man returned the principal value in 2 years which is Rupees 10,000. Later, he has to pay an interest amount of Rupees 1600 only in the third year. The total amount which is to be paid by the man by the end of third year = (principal amount + interest amount) = Rupees 10,000 + 1600 = Rupees 11,600. The total amount to be repaid is Rupees 11,600. Out of which Rupees 10,000 is already repaid. So, the amount left will be, = Rupees 11,600-10,000 = Rupees 1,600. Therefore, the man will repay Rupees 1600 by the end of third year. Hence, option (B) is the correct answer.
Note: Students may find the interest for 3 years but the correct answer we get is by finding interest for 2 years because the man borrows the money on simple interest for two years and not for the third year.