Sohan borrowed money at the rate of 20% per annum on compound interest, interest was compounding annually and he paid it in three equal installments, each of which was to be paid at the end of every year. If each installment was for ₹1,250, then the money borrowed by Sohan was (nearest integral value):
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. ₹ 2,633.
20% = 1/5
Principal : Installment
5 × 6 × 6 : 6 × 6 × 6
5 × 5 × 6 : 6 × 6 × 6
5 × 5 × 5 : 6 × 6 × 6
Each installment = 6 × 6 × 6 = 216
Principal = (5 × 6 × 6 + 5 × 5 × 6 + 5 × 5 × 5) = 455
The amount of Each installment = 1250
216 = 1250
1 = 1250/216 = 5.787
P = 455 × 5.787 = 2633.1 = ₹ 2,633