A mobile phone is available for ₹79,860 by cash payment or by paying cash of ₹60,000 as down payment and the remaining amount in three equal annual instalments. If the shopkeeper charges interest at the rate of 10% per annum compounded annually, then the amount of each instalment (in) will be:
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 7,986
Given that
Mobile phone cost by cash payment = 79860
Down payment by cash = 60000
Remaining amount = 79860 - 60000 = 19860
This remaining amount psid in 3 equal instalments .
Let each instalment amount = x Rs
Formula used
x / (1+r/10) + x/(1+r/100)2+ x/(1+r/100)3 = Amount
x/(1+(1/10)) + x/(1+(1/10))2 + x/(1+(1/10))3 = 19860
10x/11 + (10/11)2 x + (10/11)3x = 19860
(10x/11) ( 1 + 10/11 + 100/121) = 19860
x = (19860 * 121* 11)/ ( 10 × 331)
x = 6 *1331 = 7,986 Rs