Multiple choice

Raghav has to repay a loan of Rs. 12,820 in three annual instalments. The first instalment is to be half of the second and one-third of the third. If the compound interest is calculated annually at a rate of 10%, then find the value of the third instalment that Raghav has to pay.

  1. Rs. 5324

  2. Rs. 6934

  3. Rs. 7986

  4. Rs. 8986
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let the installments be x, 2x, and 3x. The present value of these installments at 10% interest is x/(1.1) + 2x/(1.1)^2 + 3x/(1.1)^3 = 12820. Solving for x: x(0.909 + 1.653 + 2.254) = 12820. 4.816x = 12820. x is approx 2662. The third installment is 3x = 7986.

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