What annual instalment will discharge a debit of Rs.5,664 in 4 years at 12% simple interest?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. Rs.1,200.
Given:
Amount = Rs 5,664
Time = 4 years
Rate = 12%
Formula used:
Installment = (100 × A)/{100 × T + RT(T – 1)/2} ---- (1)
Where R = rate, A = amount and T = time
Calculation:
Using equation (1), we get
Installment = (100 × 5664)/(100 × 4 + 12 × 4 × 3/2)
⇒ (100 × 5664)/(400 +72)
⇒ 100 × (5664/472)
⇒ 100 × 12 = Rs 1200