Question

Harikiran purchased a house in Rs. 15000 and paid Rs. 5000 at once. Rest money he promised to pay in annual instalment of Rs. 1000 with 10% per annum interest. How much money is to be paid by him

• A. Rs. 21555
• B. Rs. 20475
• C. Rs. 20500
• D. Rs. 20700

Answer 1

The correct option is C

Rs. 20500

It will take 10 years for harikiran to pay off Rs. 10000 in 10 yearly

installments.

∵ He pays 10% annual interest on interest on remaining amount

∴ Money given in first year

= 1000 + $\frac{10000\times 10}{100}$ = Rs. 2000

Money given in second year = 1000 + interest of (10000 - 1000) with interest rate 10% per annum

= 1000 + $\frac{9000\times 10}{100}$ = Rs. 1900

Money paid in third year = Rs. 1800 etc.

So money given by Jairam in 10 years will be Rs. 2000, Rs.1900, Rs. 1800, Rs. 1700,......,

which is in arithmetic progression,

whose first term a = 2000 and d = -100

Total money given in 10 years = sum of 10 terms of arithmetic

progression

= $\frac{10}{2}$[2(2000) + (10 - 1)(-100)] = Rs. 15500

Therefore, total money given by harikiran

= 5000 + 15500 = Rs. 20500.