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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

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B

Rs. 20475

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C

Rs. 20500

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D

Rs. 20700

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Solution

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 + 10000×10100 = Rs. 2000

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

= 1000 + 9000×10100 = 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

= 102[2(2000) + (10 - 1)(-100)] = Rs. 15500

Therefore, total money given by harikiran

= 5000 + 15500 = Rs. 20500.


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