Question

Calculate the total amount of money paid by a person in two years to clear the debt of Rs. 8000 at 7% interest rate. It is also given that at the end of first year, the person returns the amount of Rs. 3560.
a)Rs. 6,210
b)Rs. 6,990
c)Rs. 8,910
d)Rs. 10,250

Answer 1

Hint: In this question, we will proceed by calculating the simple interest on Rs 8000 for the first year. After the end of first year, again we calculate the simple interest on the updated principal amount. The formula for calculating the simple Interest on the principal amount is
${\text{Simple interest = }}\dfrac{{{\text{principal amount *interest rate*time period}}}}{{100}}$

Complete step-by-step answer:

The principal amount is Rs. 8000

The interest rate given in the question is 7%

At the end of first year, the simple interest is calculated with the help of the following formula

${\text{Simple interest = }}\dfrac{{{\text{principal amount *interest rate*time period}}}}{{100}}$

So, the simple interest calculated is

$ = \dfrac{{8000*7*1}}{{100}}$

$ = {\text{ Rs}}{\text{. 560}}$

$\therefore {\text{ Total Amount becomes at the end of first year = 8000 + 560 }}$

$ = {\text{ Rs}}{\text{. 8560}}$

At the end of first year, the person will return Rs. 3560

$

  \therefore {\text{ Updated amount after returning some amount = 8560 - 3560}} \\

  {\text{ = Rs}}{\text{. 5000}} \\

$

Now, the principle amount = Rs. 5000

Then, for the second year, the simple interest calculated is

$

   = \dfrac{{5000*7*1}}{{100}} \\

   = 50*7 \\

   = {\text{Rs }}350 \\

$

Therefore, the total amount paid in two years is

$

   = 8000 + 560 + 350 \\

   = {\text{ Rs}}{\text{. 8910}} \\

$

This is the same as option c.

$\therefore {\text{ Option c is the correct answer}}$

Note: The main thing that we have to keep in mind while solving these types of questions is that we have to continuously update the principal amount after the end of every year. As in the above question, at the end of first year, the person has to return some amount but also now the value of Rs. 8000 has arisen to Rs 8560 due to simple interest on Rs 8000.