Question

A sum of Rs. 12000 is borrowed at $12\%$ p.a. compounded annually which is paid back in 3 equal annual installments. What is the amount of each installment?

• A. 4997
• B. 5990
• C. 4599
• D. 3896

Answer 1

The correct option is A

4997

$1^{st}method:12000=x\times [\frac{25}{28}+(\frac{25}{28}{)}^2+\left(\frac{25}{28}{)}^3\right]$

$=x\times \frac{25}{28}[1+\frac{25}{28}+\frac{625}{784}]$

$=\frac{25x}{28}\left[\frac{2109}{784}\right]$
x=4996.1878

$2^{nd}method:$
$12000(1.12{)}^3=x[1+\left(1.12\right)+\left(1.12{)}^2\right]$
x= 4996.187