Ashok borrowed Rs. 12000 at some rate percent Compound interest. After a year he paid back Rs. 4000. If compound interest for the second year be Rs. 920. Find:

II) The rate of interest charged

II) The amount of debt at the end of the second year

I) Let’s suppose Ashok take a loan of Rs. 12000 at the rate of x % yearly.

Amount charge after one year (interest)

For 2^nd year

After one year, Ashok paid back Rs. 4000

So, the total amount after one year

P = 12000 + 120x – 4000

P = 8000 + 120x

= (80 + 1.2x) × x

= 80x + 1.2x²

We consider compound interest same as simple interest

So,

By multiplying 2.5 in the above expression,

We can’t consider negative value of x so the interest is 10%

II) For 1^st year interest

For 2^nd year interest

the amount of debt at the end of the second year is

= 8000 + 1200 + 920

= Rs. 10120