Multiple choice

Manushree paid three equal installments to bank, each of Rs. 3,000 at the end of an year on a sum at 10% compound interest compounded annually. Find the sum.

  1. Rs. 9,000

  2. Rs. 7,460

  3. Rs. 9,500

  4. Rs. 10,000

  5. None of these
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B Correct answer
Explanation

This is an annuity problem. Sum = 3000/(1.1) + 3000/(1.1)^2 + 3000/(1.1)^3 = 2727.27 + 2479.34 + 2253.94 = 7460.55.

AI explanation

The original sum is the present value of the three equal installments of 3000 calculated at 10% compound interest using the present value formula. This gives 3000 divided by 1.10 plus 3000 divided by 1.21 plus 3000 divided by 1.331. Adding these present values of 2727.27, 2479.34, and 2253.94 results in a total principal of 7460 rupees.

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