Mr. Ravi borrows Rs 16000 for 2 years. The rate of interest for the two successive years are `10%` and `12%` respectively. If be pays Rs 5600 at the end of first year, find the amount outstanding at the end of the second year.

Answer

To solve the problem, we will follow these steps:

### Step 1: Calculate the Simple Interest for the First Year
Given:
- Principal (P) = Rs. 16,000
- Rate of Interest (R) = 10%
- Time (T) = 1 year

The formula for Simple Interest (SI) is:
\[ SI = \frac{P \times R \times T}{100} \]

Substituting the values:
\[ SI = \frac{16000 \times 10 \times 1}{100} = \frac{160000}{100} = 1600 \]

### Step 2: Calculate the Total Amount at the End of the First Year
The total amount (A) at the end of the first year is the sum of the principal and the interest:
\[ A = P + SI = 16000 + 1600 = 17600 \]

### Step 3: Calculate the Outstanding Principal after Payment at the End of the First Year
Mr. Ravi pays Rs. 5600 at the end of the first year. Therefore, the outstanding principal after this payment is:
\[ \text{Outstanding Principal} = A - \text{Payment} = 17600 - 5600 = 12000 \]

### Step 4: Calculate the Simple Interest for the Second Year
Now, for the second year:
- New Principal (P) = Rs. 12,000 (outstanding principal)
- Rate of Interest (R) = 12%
- Time (T) = 1 year

Using the Simple Interest formula again:
\[ SI = \frac{12000 \times 12 \times 1}{100} = \frac{144000}{100} = 1440 \]

### Step 5: Calculate the Total Amount at the End of the Second Year
The total amount at the end of the second year is:
\[ A = \text{Outstanding Principal} + SI = 12000 + 1440 = 13440 \]

Thus, the amount outstanding at the end of the second year is **Rs. 13440**.

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