Multiple choice

Cost price of freeze is Rs.20000. A customer purchase this on a cash down payment of Rs.5000 and promise to pay remaining amount in three equal annual instalment. If the rate of compound interest is 12.5% per annum, then find the value of each instalment?

  1. Rs.1020

  2. Rs.3816

  3. Rs.6299

  4. Rs.6300

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Balance after down payment: 20000-5000=15000. For compound interest at 12.5%, PV factor = 1/(1.125)^t. PV of 3 installments = I[1/1.125 + 1/(1.125)^2 + 1/(1.125)^3] = I[0.8889 + 0.7901 + 0.7023] = I × 2.3813. Setting equal to 15000: I = 15000/2.3813 = Rs. 6299. Option C is correct.

Keep practicing — related questions