Question

What annual payment will discharge a debt of Rs. 7620 due in 3 years at $16\frac{2}{3}$% per annum compound interest?

• A. Rs. 2540
• B. Rs. 3430
• C. Rs. 3260
• D. Rs. 3380

Answer 1

The correct option is B Rs. 3430

Let each instalment be Rs. $x$. Then
$\frac{x}{(1+\frac{50}{3\times 100})}+\frac{x}{(1+\frac{50}{3\times 100}{)}^2}+\frac{x}{(1+\frac{50}{3\times 100}{)}^3}$
$=7620$
or $\frac{6x}{7}+\frac{36x}{49}+\frac{216x}{343}=7620$
$294\times 252x+216x=7620\times 343$
or $x=\frac{7620\times 343}{762}=3430$
$\therefore$ Amount of each instalment $=Rs.3430$.