Shortcut Trick
Total interest to be paid = Rate × Sum of Principal amounts for each year
⇒ Principal for 1st year (P1) = 1,41,545
⇒ Principal for 2nd year (P2) = 1,41,545 − 25,490 = 1,16,055
⇒ Total Interest = 11% × (1,41,545 + 1,16,055) = 11% × 2,57,600 = 28,336
⇒ Final Amount = Remaining Principal + Total Interest = 1,16,055 + 28,336 = 1,44,391
∴ The correct answer is ₹1,44,391.
Alternate Method
Given:
Original Principal (P) = ₹1,41,545
Rate of Interest (R) = 11% p.a.
Repayment of Principal at the end of Year 1 = ₹25,490
Year 0
P = ₹1,41,545
Year 1
− ₹25,490 (Prin.)
P = ₹1,16,055
Year 2
Final Dues
Int 1 = 11% of P
Int 2 = 11% of New P
Final Payment = New P + Int 1 + Int 2
Calculations:
⇒ Interest accrued in the 1st year = (P × R × T) ÷ 100
⇒ I1 = (1,41,545 × 11 × 1) ÷ 100 = 15,569.95
⇒ Remaining Principal for the 2nd year = 1,41,545 − 25,490 = 1,16,055
⇒ Interest accrued in the 2nd year (I2) = (1,16,055 × 11 × 1) ÷ 100 = 12,766.05
⇒ Total pending interest = 15,569.95 + 12,766.05 = 28,336
⇒ Final payment at the end of 2nd year = Remaining Principal + Total Interest
⇒ Final payment = 1,16,055 + 28,336 = 1,44,391
∴ The correct answer is ₹1,44,391.
Additional Information
Simple Interest Formula
Simple Interest (SI) = (P × R × T) ÷ 100, where P is Principal, R is Rate of interest per annum, and T is Time in years.
Partial Repayment in Simple Interest
When a partial repayment is made specifically towards the principal, the interest for subsequent periods is calculated only on the remaining newly reduced principal balance.
Amount Formula
The total Amount (A) to be paid to clear a loan is the sum of the currently remaining Principal and all accumulated pending Interest (A = P + I).