Question 70

Kushal borrowed ₹82,000 from HSBC under a unique repayment scheme. He plans to repay the loan over two years, with the payment at the end of the second year being three times the amount paid at the end of the first year. Given that the interest rate is 10% compounded annually, calculate the total interest paid over the two years.

Solution

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Using the installments formula, we get the equation, 
$$82000=\frac{X}{1.1}+\frac{3X}{1.21}$$
$$82000=\frac{1.1X}{1.21}+\frac{3X}{1.21}$$
$$82000=\frac{4.1X}{1.21}$$
$$X=24200$$

Total amount paid is 4X=96800

Interest paid is 96800-82000=14800

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