Question

What annual payment will discharge a debt of rs.1092 due in 2 yrs at 12% simple interest?

Answer 1

Answer:

Total amount due after 1 year = 1092 X 1.12 = 1223.04  

Let the annual installment paid be x  

Balance = 1223.04 - x  

Amount due after 2nd year = ( 1223.04 - x) *1.12 = 1369.80 - 1.12x  

Annual installment paid = x  

Balance = 1369.80 - 2.12x  

Amount due after 3rd year = ( 1369.80 - 2.12x ) *1.12 = 1534.18 - 2.3744x  

Amount paid = x  

Balance = 1534.18 - 3.3744x = 0  

x = 454.65 ANSWER