What annual payment will discharge a debt of ₹1,936 in four annual equal instalments at the rate of 14% on simple interest?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹400.
Let the first instalment be Rs. 100
Now the total instalment is 4.
Now, to find the next instalment, we add the rate of interest on the previous instalment every time.
The second instalment ⇒ 100 + 14 = Rs. 114
Third installment = 114 + 14 = Rs. 128
Fourth installment = 128 + 14 = Rs. 142
Total amount
⇒ 100 + 114 + 128 + 142 = Rs. 484
∵ When the amount is Rs. 484, then the first instalment is 100
∴ If the amount is Rs. 1936, then the instalment
⇒ (100/484) × 1936 = Rs. 400.
Thus, the annual payment will be Rs. 400.