A person bought a refrigerator worth Rs. 22,800 with 12.5% interest compounded yearly. At the end of first year he paid Rs. 8,650 and at the end of second year Rs. 9,125. How much will he have to pay at the end of third year to clear the debt?

The problem involves calculating the outstanding debt year by year with compound interest and partial payments. 1. Initial debt = Rs. 22,800. Interest rate = 12.5% per annum, which is equivalent to 1/8. 2. End of Year 1: Interest for Year 1 = 22,800 * (1/8) = Rs. 2,850. Total amount due at end of Year 1 = 22,800 + 2,850 = Rs. 25,650. Payment made = Rs. 8,650. Outstanding principal for Year 2 = 25,650 - 8,650 = Rs. 17,000. 3. End of Year 2: Interest for Year 2 = 17,000 * (1/8) = Rs. 2,125. Total amount due at end of Year 2 = 17,000 + 2,125 = Rs. 19,125. Payment made = Rs. 9,125. Outstanding principal for Year 3 = 19,125 - 9,125 = Rs. 10,000. 4. End of Year 3: Interest for Year 3 = 10,000 * (1/8) = Rs. 1,250. Amount to be paid to clear the debt = 10,000 + 1,250 = Rs. 11,250. Therefore, he will have to pay Rs. 11,250 at the end of the third year. Option D is Rs. 11,250, which matches our calculation. The final answer is D