Question 1: Four equal installments, each of Rs. 500, were paid at the end of the year on a sum borrowed at 10% compounded annually. Find the sum (correct up to 2 decimal place).
a. Rs. 1584
b. Rs. 1456
c. Rs. 1390
d. Rs. 1595
Answera and Explanation
Option a
Rate= 10%
Installment = Rs.500
Principal=?
Putting these values in the formula:
Question 2: A sum of Rs. 240 is to be repaid in 3 equal annual installments. If rate =20% compounded annually, then the value of each installment will be? (rounded off to a whole number)
a. Rs. 120
b. Rs. 140
c. Rs. 114
d. Rs. 116
Answer and Explanation
Option c
Let the value of installment be p
Equating the amounts
240x(1.2)3=p+1.20p +1.44p
p= Rs. 114
Question 3: Calculate the amount of equal installment, which will discharge a debt of Rs. 4240 due in 4 years at 4% p.a. of simple interest.
a. Rs. 1200
b. Rs. 1000
c. Rs. 1104
d. Rs. 1160
Answer and Explanation
Option b
Question 4: A sum of Rs. 12300 is borrowed at 5% pa compound interest and paid back in 2 equal annual installments. What is the amount of each installment?
a. Rs. 6615
b. Rs. 6800
c. Rs. 7300
d. Rs. 5600
Answer and Explanation
Let the value of installment be x
Equating the amounts
6150*(1.05)2=x+1.05x
x= Rs. 6615
Question 5: A TV set is sold for Rs.880 cash or for Rs.400 cash down payment together with Rs.488 to be paid after one month. Find the rate of interest charged in the installment scheme.
a. Rs. 12%
b. Rs. 10%
c. Rs. 20%
d. Rs. 11%
Answera and Explanation
Principal for the next month = 880 – 400 = 480
Amount paid after next month = 488
Therefore interest charged at Rs.480 = 480×1×R/12×100 which is equal to Rs.8
(As interest = principal – amount = 488-480) Therefore, Rate of interest (R) = 20% per annum
Simple Interest (Complete Lesson): Table of Contents
Practice Tests
