Multiple choice

An amount of Rs 7317 is to be repaid in three equal installments at 11 (1/9)% compound interest. Find each installment?

  1. Rs 2000

  2. Rs 3000

  3. Rs 4000

  4. Rs 5000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let each installment be x. Rate = 11 1/9% = 100/9% = 1/9. PV of first installment (year 1): x/(1 + 1/9) = x/(10/9) = 0.9x. PV of second installment (year 2): x/(10/9)^2 = 0.81x. PV of third installment (year 3): x/(10/9)^3 = 0.729x. Sum = 2.439x = 7317. Solving: x = 7317/2.439 ≈ ₹3000. Verification: 3000 × 2.439 = ₹7317.

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