Multiple choice

Sunita purchased a home appliance worth Rs. 52,000 on an instalment plan. She pays Rs. 10,000 upfront, and the rest in 2 equal annual instalments. The interest rate is 10% on the remaining balance. What is the amount of each instalment?

  1. Rs. 20,340

  2. Rs. 22,400

  3. Rs. 24,200

  4. Rs. 24,700

  5. Rs. 25,200
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Remaining balance = 52000 - 10000 = 42000. Let x be the installment. The balance after 1st year is 42000 * 1.1 - x. The balance after 2nd year is (42000 * 1.1 - x) * 1.1 - x = 0. 42000 * 1.21 - 1.1x - x = 0. 50820 = 2.1x. x = 50820 / 2.1 = 24200.

AI explanation

After the upfront payment, the remaining balance subject to interest is 52000 minus 10000, which is 42000. If each installment is x, the present value equation is 42000 equals x divided by 1.10, plus x divided by 1.10 squared. This simplifies to 42000 equals x multiplied by 1.7355. Dividing 42000 by 1.7355 gives an installment amount of approximately Rs. 24,200.

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