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Kamala borrowed Rs 26,400 from a Bank to buy a scooter at a rate of 15% p.a. compounded yearly. What amount will she pay at the end of 2 years and 4 months to clear the loan?

Kamala borrowed Rs 26,400 from a Bank to buy a scooter at a rate of 15% p.a. compounded yearly. What amount will she pay at the end of 2 years and 4 months to clear the loan? (Hint: Find A for 2 years with interest is compounded yearly and then find SI on the 2nd year amount for  \frac{4}{12}  years )

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The amount borrowed from the bank = Principal amount, P = Rs 26400

Compound interest rate, R = 15% p.a.

Time period = 2 years 4 months = 2\frac{4}{12} = 2\frac{1}{3} years

We know, Amount when interest is compounded annually, A = P(1+\frac{R}{100})^n

Therefore, for the first 2 years, amount, A = 26400(1+\frac{15}{100})^2 = Rs 34914

Now, this would act as principal for the next 1/3 year. We find the SI on Rs 34914 for 1/3 year.

SI = \frac{34914\times\frac{1}{3}\times15}{100} = Rs 1745.70

Therefore, Required amount at the end of 2 years and 4 months = A + SI = Rs (34914 + 1745.70) = Rs 36659.70

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