Ramesh takes a loan of Rs 20000
from Karan at a simple interest of
20%. He agrees to clear the loan,
along with the interest, in four equal
installments, each at the end of one
year, for four years. But, Karan puts
forward a condition that he will
continue to calculate the interest on
the original amount lended till
Ramesh completely pays off his
loan. What is the value of each
installment?
Rs 9000
Rs 9500
Rs 10000
None of these
Answers
Please mark me as brilliant
Given :-
- Ramesh takes a loan of Rs 20000 from Karan at a simple interest of 20%.
- He agrees to clear the loan, along with the interest, in four equal installments, each at the end of one year, for four years.
- But, Karan puts forward a condition that he will continue to calculate the interest of the original amount lended till Ramesh completely pays off his loan.
To Find :-
What is the value of each installment ?
A) Rs 9000
B) Rs 9500
C) Rs 10000
D) None of these.
Concept and formula used :-
- Interest is always calculated on the initial principal amount and not on the outstanding amount.
- The simple interest for each of the is same.
- simple interest = (Principal * Rate * Time) / 100.
Solution :-
Given that,
→ Principal = Rs.20000
→ Rate = 20% per annum.
→ Time = 4 years.
So,
→ Simple interest = (20000 * 20 * 4)/100 = Rs.16000 .
As , we have given that, he pays interest every year on principal only. which is same every year. So, he has to pay Rs.16000 as a interest for 4 years.
Therefore,
→ Total amount paid = Principal + Simple interest .
→ Amount = 20000 + 16000
→ Amount = Rs.36000
Hence,
→ Value of each equal installment = 36000/4
→ Each installment = Rs.9000 .(Option A) (Ans.)
Learn More :-
The difference between the compound interest & simple interest on a sum of ₹15000 for 2 years is ₹96 find the rate of in...
https://brainly.in/question/16231538
calculate the difference between compound interest and simple interest on rupees 5000 of 2 year at 8% per annum payable ...
https://brainly.in/question/16939635