A farmer borrowed ₹1,32,000 from a money lender to do cultivation in his field. The rate of interest is 12.5% p.a. compounded annually. At the end of two years, he cleared his loan by paying ₹1,07,062.50 and his scooter. The cost (in ₹) of the scooter is:
Answer
The correct answer is B: 60,000. Amount after 2 years = 1,32,000 × (1 + 1/8)² = 1,32,000 × (9/8)² = 1,32,000 × 81/64 = ₹1,67,062.50. Scooter cost = 1,67,062.50 − 1,07,062.50 = ₹60,000.