A person takes a loan of ₹ 5000 at 5% simple interest. He returns ₹ 3000 at…
2025
A person takes a loan of ₹ 5000 at 5% simple interest. He returns ₹ 3000 at the end of one year. How much he would have to pay, in order to clear his dues, at the end of 2 years?
- A.
₹ 2450
- B.
₹ 2500
- C.
₹ 2350
- D.
₹ 2400
Attempted by 12 students.
Show answer & explanation
Correct answer: C
First, calculate the interest for the first year on the original principal of ₹ 5000 at 5%. Interest = 5000 × 0.05 = ₹ 250.
The borrower returns ₹ 3000, which reduces the principal to ₹ 2000 (5000 - 3000). The first year's interest of ₹ 250 remains outstanding.
Next, calculate the interest for the second year on the reduced principal of ₹ 2000. Interest = 2000 × 0.05 = ₹ 100.
Finally, sum the remaining principal (₹ 2000), the first year's interest (₹ 250), and the second year's interest (₹ 100) to find the total amount due.
Total = 2000 + 250 + 100 = ₹ 2350.