Shabnam borrows ₹30,000 at 10% per annum, compounded annually. She repays ₹13,000 at the end of the first year. How much must she pay at the end of the second year to clear the loan?

₹20,000Correct answerYour answer₹22,000Correct answerYour answer₹23,000Correct answerYour answer₹23,300Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

End of year 1: ₹30,000 × 1.1 = ₹33,000 is owed.
After paying ₹13,000, ₹20,000 remains.
End of year 2: ₹20,000 × 1.1 = ₹22,000.

Worth noting

₹23,300 charges two years' interest on the full ₹30,000, ignoring that the ₹13,000 payment stopped earning interest. ₹20,000 forgets the second year's interest.

Concept: A part payment on a compound-interest loan
Typical timeTypical: 90 s
Your timeYours: —

The rule this testsCompound interest

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Ten questions from Simple & Compound Interest, at your own pace.

Shabnam borrows ₹30,000 at 10% per annum, compounded annually. She repays ₹13,000 at the end of the first year. How much must she pay at the end of the second year to clear the loan?

Explanation