Multiple choice

What annual installment will discharge a debt of Rs. 47250 for 3 years hence at the rate of 5% simple interest?

  1. Rs. 16050

  2. Rs. 14750

  3. Rs. 15000

  4. Rs. 15500
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For annual installments under simple interest, each installment earns interest for the remaining period. Let annual installment = x. Total value: x(1 + 2×0.05) + x(1 + 1×0.05) + x = x(1.1 + 1.05 + 1) = 3.15x. This equals 47250, so x = 47250/3.15 = 15000. Verification: First installment earns 10% interest (2 years), second earns 5% (1 year), third earns nothing: 15000×1.1 + 15000×1.05 + 15000 = 16500 + 15750 + 15000 = 47250. Option A (16050) would give total 50557.5.

Keep practicing — related questions