Uh-Oh! That’s all you get for now. We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now Uh-Oh! That’s all you get for now. We would love to personalise your learning journey. Sign Up to explore more. Sign Up or Login Skip for now
Get the answer to your homework problem. Try Numerade free for 7 days
University of Wisconsin - Milwaukee
What monthly instalment will discharge a debt of 2455 due after one year at 5% p.a. simple interest? The total amount is Rs. 1936. The rate of interest is 14%. The time is 4 years. The type of installment is annual. Concept: In simple all installments are always the same if no conditions apply. Simple interest is the one where interest once credited does not earn interest on it. Formula used: Instalment = (100 × Amount)/{(100 × t) + (r × t × ((t – 1)/2))} Where T is time and R is the rate of interest. Calculation: The total amount is Rs. 1936. The rate of interest is 14%. The time is 4 years. Then we calculate the first installment by using formula ⇒ Instalment = (100 × Amount)/{(100 × t) + (r × t × (t – 1)/2))} ⇒ Installment = (100 × 1936)/{(100 × 4) + (14 × 4 × ((4 – 1)/2))} ⇒ Installment = 193600/(400 + 84) ⇒ Installment = 193600/484 = Rs. 400 Thus, the annual payment will be Rs. 400. Alternate Method Let the first installment be Rs. 100 Now the total installment is 4. Now to find the next installment we add the rate of interest in the previous installment every time. Then second installment ⇒ 100 + 14 = Rs. 114 Third installment = 114 + 14 = Rs. 128 Fourth installment = 128 + 14 = Rs. 142 Total amount ⇒ 100 + 114 + 128 + 142 = Rs. 484 ∵ when amount is Rs. 484 then first installment is 100 ∴ if the amount is Rs. 1936 then installment ⇒ (100/484) × 1936 = Rs. 400. Thus, the annual payment will be Rs. 400. |