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Rajan borrowed Rs.4000 at 5% p.a compound interest. After 2 years, he repaid Rs.2210 and after 2 more year, the balance with interest. What was the total amount that he paid as interest?

Correct answer: A. Rs.635.50

  • A. Rs.635.50
  • B. Rs.613.50
  • C. Rs.675.50
  • D. Rs.653.50

Explanation

After 2 years, the debt is Rs.4000 x 1.05² = Rs.4410; after repaying Rs.2210, Rs.2200 remains. This balance grows for 2 more years to Rs.2200 x 1.05² = Rs.2425.50, so total paid is Rs.2210 + Rs.2425.50 = Rs.4635.50 and total interest is Rs.4635.50 - Rs.4000 = Rs.635.50. Students may choose Rs.613.50 by mishandling the second two-year compounding period.

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