Multiple choice

Y bought a CD Player costing Rs. $13,000$ by making a down payment of Rs. $3,000$ and agreeing to make equal annual payment for four years. How much would be each payment if the interest on unpaid amount be $14\%$ compounded annually?$[P(4, 0.14)2.91371]$

  1. Rs. $3,432.05$
  2. Rs. $3,423.50$
  3. Rs. $3,342.05$
  4. Rs. $3,234.50$
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A Correct answer
Explanation

The unpaid amount is Rs. 10,000. With four equal annual payments, the annuity factor is 2.91371, so each payment is 10,000/2.91371 = approximately Rs. 3,432.05.

AI explanation

The remaining cost of the CD player after the down payment is 13000 minus 3000, which is Rs. 10000. To find the equal annual payment for four years at 14% compound interest, we divide this present value by the given annuity factor. The calculation is 10000 divided by 2.91371. Performing this division results in each payment being Rs. 3432.05.

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