Question
A person lends Rs. 18,000 to a friend at a simple
interest rate of 10% per annum. After 2 years and 6 months, the friend returns Rs. 12,000 and asks for an extension on the remaining amount. What is the new principal amount that the person will charge interest on for the next 6 months?Solution
Interest for 2.5 years = (18000 * 10 * 2.5) / 100 = 4500 Total amount owed = 18000 + 4500 = 22500 Remaining principal = 22500 - 12000 = 10500 Therefore, the new principal amount is Rs. 10,500.
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