Multiple choice

Ranjan takes a loan of 150000 rupees at an interest rate of 20% at compound interest, which is compounded annually. He agrees to pay it in three equal installments in three years. Find the value of each installment.

  1. Rs 74209

  2. Rs 78349

  3. Rs 74484

  4. Rs 71209

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

Let x be each installment. Present value of all installments equals principal: x/(1.2) + x/(1.2²) + x/(1.2³) = 150000. This gives x(0.8333 + 0.6944 + 0.5787) = 150000, so x(2.1064) = 150000, x ≈ 71209.

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