what annual instalment will discharge a debt of Rs.1092 in 3 years at 12% S.I.?
Answers
Since the interest should not be added to the principle amount in case of simple interest we will have to keep it separately.
Total to be paid is 1092 as principle + the simple interest for the three years
There will be three equal annual installments let it be X
The amount paid every year will be deducted from the principle
The interest for the first year is 1092*12/100 = 131.04
X is the installment after one year. the principle will get reduced by that value
Balance principle will be 1092 - X and the interest for the 2nd year will have to be calculated on that and it will be (1092 - X)*12/100 = 131.04 -0.12X
Balance after two years will become 1092 - 2X and
the interest will be (1092–2X)*12/100 = 131.04 - 0.24X
total principle and interest to be paid is 1092 + 3*131.04 -0 .12X - 0.24X and this will be equal to 3X( X is the installment for each year for three years
1092 + 393.12 - 0.36X = 3X
=> 3.36X = 1485.12
Solving this X will be 442