A borrower pays 18% interest per year on the

first Rs. 600 he borrows and 17% per year on the

loan on the part of the loan in excess of Rs. 600.

How much interest will the borrower pay on the

loan of Rs. 6000 for one year? [CMAT 2004)

a. Rs. 1,020

b. Rs. 1,026

C. Rs. 1,080

d. Rs. 1,126

The interest will the borrower pay on is Rs. 1,026 ⇒ answer b

Step-by-step explanation:

* Lets explain how to solve the problem

- A borrower pays 18% interest per year on the first Rs. 600 he borrows

- He pays 17% per year on the loan on the part of the loan in excess

of Rs. 600

- We need to find the interest he will pay on the loan of 6000 for a year

∵ The lone is Rs. 6000 for 1 year

∵ He pays 18% interest for the first Rs. 600

∵ I = Prt, where I is the interest, P is the loan amount, r is the rate

of interest in decimal t is the time

∵ P = 600

∵ r = 18/100 = 0.18

∵ t = 1

∴ I = 600 * 0.18 * 1 = 108

* The interest for the first Rs. 600 is Rs. 108

- The loan is Rs. 6000, we calculated the interest for the first

Rs. 600, then we want to calculate the interest for the rest of

the loan at rate 17% per year

∵ The rest of the loan = 6000 - 600 = 5400

∵ P = 5400

∵ r = 17/100 = 0.17

∵ t = 1

∴ I = 5400 * 0.17 * 1 = 918

* The interest for the rest of the loan is Rs. 918

- The total interest is the sum of the two interest above

∵ The interest of Rs. 600 is Rs. 108

∵ The interest of the rest of the loan is Rs. 918

∴ The total interest = 918 + 108 = 1026

* The interest will the borrower pay on is Rs. 1,026