Multiple choice

What is the annual instalment to discharge a debt of Rs. 2210 due in 4 years at 7% simple interest?

  1. 400 Rs.

  2. 500 Rs.

  3. 600 Rs.

  4. 450 Rs.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let each annual instalment be Rs. x. The first instalment is paid after 1 year and earns interest for 3 years, the second for 2 years, third for 1 year, and fourth for 0 years. Using the formula for sum of instalments with simple interest: x(1 + 3×0.07) + x(1 + 2×0.07) + x(1 + 0.07) + x = 2210. This gives x(1.21 + 1.14 + 1.07 + 1) = 2210, so x(4.42) = 2210, hence x = 500. Each instalment is Rs. 500.

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