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A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid back in 3 equal annual instalments. What is the amount of each instalment?
- a)Rs. 2937.67
- b)Rs. 3000
- c)Rs. 2037.67
- d)Rs. 2739.76
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid ba...
Let the repayment annually be X. Then: 8000 + 3 years interest on 8000 (on compound interest of 5%) = X + 2 years interest on X + X + 1 years interest on X + X → X = 2937.67
Most Upvoted Answer
A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid ba...
Given:
Principal amount, P = Rs. 8000
Rate of interest, r = 5%
Time period, n = 3 years
Annual instalment is to be paid back in 3 equal parts
Formula Used:
Compound Interest = P(1 + r/n)^(n*t)
Amount = P(1 + r/n)^(n*t)
EMI = [P*r*(1+r)^n]/[(1+r)^n - 1]
Calculation:
As the amount is to be paid back in 3 equal annual instalments, let the amount of each instalment be E.
Amount to be paid back after 1st year, A1 = P(1+r/n)^(n*1) = 8000(1+0.05/1)^(1*1) = Rs. 8400
Amount to be paid back after 2nd year, A2 = P(1+r/n)^(n*2) = 8000(1+0.05/1)^(1*2) = Rs. 8820
Amount to be paid back after 3rd year, A3 = P(1+r/n)^(n*3) = 8000(1+0.05/1)^(1*3) = Rs. 9261
From the above calculation, we can say that the sum of three instalments is equal to Rs. 8000 + Rs. 8400 + Rs. 8820 = Rs. 25220
Hence, the amount of each instalment can be calculated using the formula of EMI
EMI = [P*r*(1+r)^n]/[(1+r)^n - 1]
EMI = [8000*0.05*(1+0.05)^3]/[(1+0.05)^3 - 1]
EMI = Rs. 2937.67
Therefore, the amount of each instalment is Rs. 2937.67 (Option A)
Principal amount, P = Rs. 8000
Rate of interest, r = 5%
Time period, n = 3 years
Annual instalment is to be paid back in 3 equal parts
Formula Used:
Compound Interest = P(1 + r/n)^(n*t)
Amount = P(1 + r/n)^(n*t)
EMI = [P*r*(1+r)^n]/[(1+r)^n - 1]
Calculation:
As the amount is to be paid back in 3 equal annual instalments, let the amount of each instalment be E.
Amount to be paid back after 1st year, A1 = P(1+r/n)^(n*1) = 8000(1+0.05/1)^(1*1) = Rs. 8400
Amount to be paid back after 2nd year, A2 = P(1+r/n)^(n*2) = 8000(1+0.05/1)^(1*2) = Rs. 8820
Amount to be paid back after 3rd year, A3 = P(1+r/n)^(n*3) = 8000(1+0.05/1)^(1*3) = Rs. 9261
From the above calculation, we can say that the sum of three instalments is equal to Rs. 8000 + Rs. 8400 + Rs. 8820 = Rs. 25220
Hence, the amount of each instalment can be calculated using the formula of EMI
EMI = [P*r*(1+r)^n]/[(1+r)^n - 1]
EMI = [8000*0.05*(1+0.05)^3]/[(1+0.05)^3 - 1]
EMI = Rs. 2937.67
Therefore, the amount of each instalment is Rs. 2937.67 (Option A)
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A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid back in 3 equal annual instalments. What is the amount of each instalment?a)Rs. 2937.67b)Rs. 3000c)Rs. 2037.67d)Rs. 2739.76Correct answer is option 'A'. Can you explain this answer?
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A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid back in 3 equal annual instalments. What is the amount of each instalment?a)Rs. 2937.67b)Rs. 3000c)Rs. 2037.67d)Rs. 2739.76Correct answer is option 'A'. Can you explain this answer? for Quant 2024 is part of Quant preparation. The Question and answers have been prepared according to the Quant exam syllabus. Information about A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid back in 3 equal annual instalments. What is the amount of each instalment?a)Rs. 2937.67b)Rs. 3000c)Rs. 2037.67d)Rs. 2739.76Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Quant 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A sum of Rs. 8000 is borrowed at 5% p.a. compound interest and paid back in 3 equal annual instalments. What is the amount of each instalment?a)Rs. 2937.67b)Rs. 3000c)Rs. 2037.67d)Rs. 2739.76Correct answer is option 'A'. Can you explain this answer?.
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