P borrows ₹5,00,000 from the bank which charges 18% simple interest per annum at the start of the year. He pays 11 equal monthly instalments of ₹40,000 and his bike at the end of the year to pay the amount. What is the value of the bike given?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 1,50,000.
Total interest for 1 year = (P × R × T)/100 = (500000 × 18 × 1)/100 = 90000
Total amount owed = 500000 + 90000 = 590000
Total monthly payments = 11 × 40000 = 440000
Bike value = 590000 - 440000 = 150000