CAT 2023 Slot 2 QA Question 13: Anil borrows Rs 2 lakhs at an interest rate of 8% per annum, compounded half-yearly. He repays Rs 10320 at the end of the first year and closes the loan by paying the outstanding amount at the end of

Question

Anil borrows Rs 2 lakhs at an interest rate of 8% per annum, compounded half-yearly. He repays Rs 10320 at the end of the first year and closes the loan by paying the outstanding amount at the end of

Accepted Answer

Since interest is compounded half-yearly, the half-yearly rate is 4%.

At the end of the first year, two half-yearly periods have passed.
$	ext{Outstanding before repayment} = 200000(1.04)^{2} = 216320$
$	ext{Outstanding after repayment} = 216320 - 10320 = 206000$

From the end of the first year t

Anil borrows Rs 2 lakhs at an interest rate of 8% per annum, compounded half-yearly. He repays Rs 10320 at the end of the first year and closes the loan by paying the outstanding amount at the end of the third year. Then, the total interest, in rupees, paid over the three years is nearest to