A trader owes a merchant ₹9,810 due in 1 year, but the trader wants to settle the account after 6 months. If the rate of simple interest is 9% per annum, how much cash (in ₹) should he pay?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. ₹9405.
Principal = 100%
Amount due after 1 year = 109%
109% = ₹9810
So,
1% = 9810 ÷ 109 = 90
For 6 months, interest will be half of 9%:
6 months interest = 9% ÷ 2 = 4.5%
Therefore, settlement amount after 6 months = 100% + 4.5% = 104.5%
Required cash payment = 104.5 × 90 = ₹9405