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Q: A person borrowed Rs. 10000 at 10% rate of compound interest. He repaid certain amount at the end of the first year. Then he paid Rs. 5500 at the end of the second year thereby discharging the loan completely. What amount did he repay at the end of the first year?
A. Rs.5500 B. Rs. 6600
C. Rs. 5750 D. Rs. 6000

Answer and Explanation

Answer:Rs. 6000

Explanation:
The amount of Rs. 10000 borrowed at 19% rate will become 11000 at the end of the first year. At this point a certain amount was repaid and let the amount be repaid Rs. A. Principal for 2nd year = Rs. (1100 – A). At 10% rate of interest, this will amount to (1100 – A) × 1.1 at the end of 2nd year. But by repaying Rs. 5500, the loan has been discharged completely.
∴ (1100 – A) × 1.1 = 5500
∴ 1100 – A = 55000/11 = 5000
∴ A = Rs. 6000
∴ The amount repaid at the end of 1st year = Rs. 6000

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