Question

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

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Solution

The correct option is **C**

Rs. 20500

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

∵ He pays 10% annual 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 Jairam

= 5000 + 15500 = Rs.20500.

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