Multiple choice

A company dealer sells home appliances on installments and claims to make only 15% compound interest, compounded annually. A man buys a geyser from the dealer and agrees to pay in two equal yearly installments of Rs. 1058 each. What is the original price of the geyser?

  1. Rs.1800

  2. Rs.1820

  3. Rs.1720

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let P be the original price. Installments are 1058. P = 1058 / 1.15 + 1058 / (1.15)^2 = 920 + 800 = 1720.

AI explanation

Let the original price of the geyser be P. The dealer makes 15% compound interest, so the present value of the two installments of Rs. 1058 must equal P. The present value is 1058 divided by 1.15 plus 1058 divided by 1.15 squared. This calculates to 920 added to 800, which equals Rs. 1720.

Keep practicing — related questions