Question : What annual installment will discharge a debt of Rs.9,600 due in 5 years at 10% simple interest?
Option 1: Rs. 1450
Option 2: Rs. 1550
Option 3: Rs. 1500
Option 4: Rs. 1600
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Correct Answer: Rs. 1600
Solution :
Assume the annual instalment as $x$.
First-year ⇒ installment = 100% of $x$
Second year ⇒ installment = 110% of $x$
Third year ⇒ installment = 120% of $x$
Fourth year ⇒ installment = 130% of $x$
Fifth year ⇒ installment = 140% of $x$
100% of $x$ + 110% of $x$ + 120% of $x$ + 130% of $x$ + 140% of $x$ = 9600
⇒ (100+110+120+130+140)% of $x$ = 9600
⇒ 600% of $x$ = 9600
⇒ $x$ = $\frac{9600×100}{600}$ = 1600
So, the annual installment = Rs. 1600
Hence, the correct answer is Rs. 1600.
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