Multiple choice

Directions: Type in your answer in the input box provided below the question. Joshua took a loan of ₹67100 from a moneylender at 20% per annum under compound interest, compounded annually, and agreed to repay it in four equal annual installments, instalment being paid at the end of each year. Find the value of each installment.

  1. 25920

  2. 14650

  3. 750

  4. 1
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A Correct answer
Explanation

Using the formula for equal annual installments P = X / (1+r) + X / (1+r)^2 + X / (1+r)^3 + X / (1+r)^4, where r=0.20 and P=67100. Solving for X gives 25920.

AI explanation

Using the present value of annuity formula for compound interest, the installment equals the principal divided by the sum of the discounting factors for four years. The calculation is 67100 divided by the quantity (1 divided by 1.2) plus (1 divided by 1.44) plus (1 divided by 1.728) plus (1 divided by 2.0736). Solving this results in an installment of Rs. 25920.

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