Question

A person takes a loan of Rs 200 at 5% simple interest. He returns Rs 100 at the end of 1 year. In order to clear his dues at the end of two years, he would pay
A. Rs 105
B. Rs 110
C. Rs 115
D. Rs 115.50

Answer 1

Hint-In order to solve this question, we will individually find the amount which has to be paid by man and to find out the amount we will use the simple formula as simple interest =$\dfrac{{{\text{Principal amount }} \times {\text{ rate }} \times {\text{ year}}}}{{100}}$.

Complete step by step answer:
First we will calculate the amount that has to be paid after 1st year
So, according to the question statement
After 1st year his total outstanding amount would be 200+5%interest over Rs 200
$\therefore $Outstanding amount = $200 + \dfrac{{200 \times 5 \times 1}}{{100}}\left\{ {\because {\text{ Amount = }}\dfrac{{P \times R \times T}}{{100}}} \right\}$
=200+10
=Rs 210
After 1st year his total outstanding amount would be Rs 210 but the man repays Rs 100
$\therefore $The outstanding amount is Rs 110
So, after 2nd year his total outstanding amount would be 110 + 5% interest over Rs110
$\therefore $outstanding amount = $110 + \dfrac{{110 \times 5 \times 1}}{{100}}\left\{ {\because A = \dfrac{{P \times R \times T}}{{100}}} \right\}$
=$110 + 5.5$
=$Rs{\text{ }}115.50$
Hence, in order to clear his due at the end of 2 years, he would pay 115.50 rupees and the correct option is ‘D’.
Note- In such types of problems the amount to be paid at the end of a term or time is the sum of principal as well as simple interest. The simple interest is directly proportional to the principal amount, rate of interest and the time period.