Leelanand Kumar
Leelanand Kumar
10 years ago

What annual payment will discharge a debt of Rs.7620 due in 3 years at 16 2/3% per annum interest?

A. 5430

B. 4430

C. 3430

D. 2430

Solution(By Examveda Team)

Let each installment beRs.x.
[x/(1+(50/3*100))]+ [x/(1+(50/3*100))^2] + [x/(1+(50/3*100))^3] =7620 [Short - Cut]
(6x/7)+(36x/49)+(216x/343)=7620.
294x+252x+216x=7620*343.
x=(7620*343/762)=3430.
Amount of each installment=Rs.3430


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Comments ( 5 )

  1. Osman Ghani
    Osman Ghani :
    3 years ago

    A debt of Rs. X due in 3years at y% interest rate. In agarwal this X amoumt is considered somwhere as present value and somewhere as future value. What is the correct consideration?

  2. Sibasis Kar
    Sibasis Kar :
    6 years ago

    But here 7620 is not the present worth, it is the amount to be paid in 3 years that is future worth.

  3. Kumar Chandan
    Kumar Chandan :
    8 years ago

    Assume we have taken a loan at period 0 and have to pay installments at the end of 1, 2, 3 periods of X each.
    Now loan amount plus the interest on the total loan amount P at R% rate for 3 periods is equal to all the Installment and interests earned for the remaining period. That is the Installment.
    First period earn 3 period's Interest(Say 1st year, 2nd year and 3rd year.)
    Second period earn 2 period interest (2nd year and 3rd year)and so on. Thus it can be calculated as:
    P*[1 +(R/100)]^4 = P*[1 +(R/100)]^2 + P*[1 +(R/100)]^1 + X.

    Otherwise You can calculate through the Present Value Method Which has been used in other solution.


  4. Kumar Chandan
    Kumar Chandan :
    8 years ago

    Rs. 3430.

  5. Leelanand Kumar
    Leelanand Kumar :
    8 years ago

    Dear Teamexamveda would u pls exlain more elaborately.pls mention how installment deducted frm every year?...

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