What equal instalment of annual payment (in ₹) will discharge a debt that is due as ₹624 at the end of 5 years at 2% per annum simple interest?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. 120.
Total amount = P (first year) + (P + 0.02P) (Second year) + (P + 0.04P) (third year) + (P + 0.06P) (fourth year) + (P + 0.08P) (fifth year).
Total amount = 5P + 0.2P = 5.2P
⇒ 5.2P = 624
⇒ P = 624 / 5.2 = 120