Question

A man borrows Rs. $30000$ at $12\%$ per annum compound interest from a bank and promises to pay off the loans in $20$ annual instalments beginning at the end of the first year . What is the annual payment necessary?

• A. $4016.76$
• B. $3013.54$
• C. $4065.24$
• D. $1034.54$

Answer 1

Answer: (A)

$4016.76$

Here, $V=Rs.30000,r=12\%=0.12$ and $n=20$.

We know $V=\frac{A}{r}[1-(1+r{)}^{-n}]$

Thus $30000=\frac{A}{0.12}[1-(1+0.12{)}^{-20}]$

$\Rightarrow$ $A=\frac{30000\times 0.12}{[1-(1+0.12{)}^{-20}]}$

$\Rightarrow$ $A=\frac{3600}{[1-(1.12{)}^{-20}]}$

$\Rightarrow$ $A=$ Rs. $4016.76$