Question

Reena borrowed rs6450 at 5% simple interest repayable in 4 equal installments. what will be annual installment payable by him

Answer 1

P=6450
R=5%
T=4 regard pay installment every years
SI = PTR÷100
=> 6450X5X4
----------------
100
= Rs. 1290
Total Amount Payable :
Rs(6450+1290) = Rs. 7740

Answer 2

Option B is correct (₹ 1810)

Solution:

Let the annual instalment be ₹ X.

Let the Principal be ₹100

Amount = Principal + interest

Interest= (P ×R× T)/100

Interest= (100 x 5 x 4)/100= ₹20

Amount of ₹ 100 after 4 yr = 100 +20 = ₹ 120

Present Value (PV) of ₹ 120 due after 4 yr = ₹ 100

Present Value (PV) of ₹X due after 4 yr = 100X/120 = 5X/6

Amount of ₹ 100 after e yr = 100 +(100×5×3)/100 = ₹ 100+15= 115

PV of ₹ X due after 3 yr = 100X/115 = 20X/23

Similarly,

PV of ₹ X due after 2 yr = 10X/11

PV of ₹ X due after 1 yr = 20X/21

5X/6 + 20X/23 + 10X/11 + 20X/11 = 6450

X = ₹ 1810

Hence, the annual installment payable by him will be ₹ 1810.

HOPE THIS WILL HELP YOU....