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Question : What annual instalment(in INR approx.) will discharge a debt of INR 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.]

Option 1: 2,840

Option 2: 2,800

Option 3: 2,700

Option 4: 2,760


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

Correct Answer: 2,800


Solution : Let the required annual instalment be INR $x$.
The calculated equation for the first year is equal to the sum of instalment and interest of the remaining two years as follows:
⇒ [$x + \frac{x × 12.5 × 2}{100}$]
The calculated equation for the second year is equal to the sum of instalment and interest of the remaining year is as follows:
⇒ [$x + \frac{x × 12.5 × 1}{100}$]
The calculated equation for the third year is equal to the instalment only as no other year remains is $x$.
Now,
$[x + \frac{\text{$x$ × 12.5 × 2}}{100}] + [x + \frac{\text{$x$ × 12.5 × 1}}{100}]$$+ x = 9429$
⇒ $[3x + \frac{\text{$25x$}}{100} + \frac{\text{$12.5x$}}{100}] = 9429$
⇒ $\frac{\text{$337.5x$}}{100} = 9429$
⇒ $x = 2793.78 \approx 2800$
Hence, the correct answer is INR 2,800.

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