A man borrowed ₹ 30,000 from a bank at 10% p.a. compound interest , interest being compounded annually. At the end of first two years , he paid 9000. At the end of third year , he wanted to clear the loan. How much should he pay to clear the loan .

Effective compound interest for 2 years at 10% p.a is 21% Amount after two years = 30000 + 21% of 30000 = 36300 Part payment of 9000 happens The new principal amount at the beginning of the third year = 27300 At the end of the third year, the total amount would be 27300 + 2730 (which is the 10% interest) = 30030 Ans - Rs.30030/- Another possibility is that there is a grammatical error. They could also have meant that the person pays 9000 at the end of both the years. Principal in first year = 30000 Interest in the first year = 3000 Amount at the end of the year = 33000 Part payment at the end of year 1 = 9000 Principal for year 2 = 24000 Interest for year two = 2400 Amount at the end of year two = 26400 Part payment at the end of year two = 9000 Principal for the third year = 17400 Interest for the third year = 1740 Amount to be paid to close the loan = 19140