Mathematics for FinanceMTP June 24 Series IIQuestion 1415 of 512
All Questions

What annual payment will discharge a debt of 770\displaystyle 770 due in 5 years, the rate of interest being 5%\displaystyle 5\% per annum SI ?

Options

A150\displaystyle 150
B140\displaystyle 140
C130\displaystyle 130
DNone of these
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option b — 140\displaystyle 140

All Options:

  • A150\displaystyle 150
  • B140\displaystyle 140
  • C130\displaystyle 130
  • DNone of these

Detailed Solution & Explanation

Let the annual payment be A\displaystyle A. Under simple interest, the annual payment (installment) required to discharge a debt of D\displaystyle D due in n\displaystyle n years at rate r%\displaystyle r\% p.a. is given by: D=nA+A×r100×n(n−1)2D = nA + A \times \frac{r}{100} \times \frac{n(n-1)}{2} Given parameters: * Debt (D\displaystyle D) = Rs. 770\displaystyle \text{Rs. }770 * Time (n\displaystyle n) = 5\displaystyle 5 years * Rate (r\displaystyle r) = 5%\displaystyle 5\% p.a. Substituting the values: 770=5A+A×5100×5(5−1)2770 = 5A + A \times \frac{5}{100} \times \frac{5(5-1)}{2} 770=5A+A×0.05×202770 = 5A + A \times 0.05 \times \frac{20}{2} 770=5A+A×0.05×10770 = 5A + A \times 0.05 \times 10 770=5A+0.5A770 = 5A + 0.5A 770=5.5A770 = 5.5A Solving for A\displaystyle A: A=7705.5=140A = \frac{770}{5.5} = 140 Thus, the annual payment will be Rs. 140\displaystyle \text{Rs. }140. Hence, **Option B** is the correct answer.

More Questions from Mathematics for Finance

A sum of money invested in compounded interest doubles itself in four years. In how many years it becomes 32 times of itself as the same rate of compound interest?

The simple interest on 600\displaystyle 600 for 9 months is 27\displaystyle 27. Find the interest rate.

Miss Liza lent 4,000\displaystyle 4,000 in such a way that some amount was given to Mr. A at 3%\displaystyle 3\% p.a. S.I. and rest amount to was given to B at 5%\displaystyle 5\% p.a. S.I., the annual interest from both is 144\displaystyle 144. Find the amount lent to Mr. A.

A certain sum of money was put at S.I. for 2.5\displaystyle 2.5 years at a certain rate of S.I. p.a. Had it been put at 4%\displaystyle 4\% higher rate, it would have fetched 500\displaystyle 500 more. Find the sum of money.

Rs.1,25,000\displaystyle 1,25,000 is borrowed at compound interest at the rate of 2%\displaystyle 2\% for the 1st year, 3%\displaystyle 3\% for the second year and 4%\displaystyle 4\% for the 3rd year. Find the amount to be paid after 3 years.

If Rs. 1,000\displaystyle \text{Rs. }1,000 be invested at interest rate of 5%\displaystyle 5\% and the interest be added to the principal every 10\displaystyle 10 years, then the number in years in which it will amount to Rs. 2,000\displaystyle \text{Rs. }2,000 is:

Ready to Master Mathematics for Finance?

Practice all 512 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free