Question
A person 'P' borrowed some money
from a friend who lends under a unique interest structure. For the first two years, the annual interest rate is 5%. For the following two years, the rate increases to 10% per annum, and for the next two years after that, the interest rate rises to 20% per annum. If 'P' borrowed the money for a total of 6 years and paid Rs. 11,51,245 as interest, with the interest compounded annually, what was the principal amount that 'P' borrowed?Solution
ATQ, Let the principle borrowed be Rs. 'p' ATQ; 1151245 + p = p X (1.05)2 X (1.1)2 X (1.2)2 Or, 1151245 = 1.920996p - p Or, 1151245 = 0.920996p Or, p = Rs. 12,50,000
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