CAT 2023 Slot 2 QA Q12 Interest

Question 12 of the Quantitative Ability (QA) section, CAT 2023 Slot 2, with CAT's official answer and a worked solution.

Anil borrows Rs 2 lakhs at an interest rate of 8% per annum, compounded half-yearly. He repays Rs 10320 at the end of the first year and closes the loan by paying the outstanding amount at the end of the third year. Then, the total interest, in rupees, paid over the three years is nearest to
  1. A
    45311
  2. B
    51311
  3. C
    33130
  4. D
    40991

Answer: (B) 51311 Interest MCQ

Solution

  1. Rate is 4% per half-year. After 1 year: \(200000 \times 1.04^2 = 216320\).
  2. After repaying 10320, the balance is 206000.
  3. After two more years (4 half-years): \(206000 \times 1.04^4 = 206000 \times 1.16985856 \approx 240990.86\).
  4. Total paid \(= 10320 + 240990.86 = 251310.86\); interest \(= 251310.86 - 200000 \approx 51311\).

Same concept in other years

See every question on Loan repaid in instalments under compound interest.

More Interest questions from CAT

All 19 Interest questions asked since 2017.