What annual installment (in ₹) will discharge a debt of ₹9,429 due in three years at 12.25% simple interest per annum? [Note: Instalments will be paid at the end of Year 1, Year 2 and Year 3.]
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 2800.
Given that
A debt of ₹9,429 due in three years at 12.25% simple interest per annum
Let the installment for 1st year be 100 units
According to the question
Amount for 2nd year = 100 + 100 × 12.25/100 = 112.25 units
Similarly, Amount for 3rd year = 100 + 200 × 12.25/100 = 124.5 units
So, the net amount to be paid = 100 + 112.25 + 124.5 = 336.75 units
336.75 units = ₹9,429
1 unit = 9429/336.75 = 28
100 unit = 2800
Hence, The annual instalment is ₹ 2800