Mathematics for FinanceMTP June 24 Series IIQuestion 1532 of 512
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Mr. A borrows 5,00,000\displaystyle 5,00,000 to buy a house. If he pays equal instalments for 20\displaystyle 20 years and 10%\displaystyle 10\% interest on outstanding balance what will be the equal annual instalment?

Options

A5929.84\displaystyle 5929.84
B58729.84\displaystyle 58729.84
C68729.84\displaystyle 68729.84
DNone of these
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Correct Answer

✅ Option a — 5929.84\displaystyle 5929.84

All Options:

  • A5929.84\displaystyle 5929.84
  • B58729.84\displaystyle 58729.84
  • C68729.84\displaystyle 68729.84
  • DNone of these

Detailed Solution & Explanation

The annual instalment P\displaystyle P is: P=PVP(20,0.10)P = \frac{PV}{P(20, 0.10)} Given: * Loan amount (PV\displaystyle PV) = 5,00,000\displaystyle 5,00,000 * Annuity factor P(20,0.10)≈8.51356\displaystyle P(20, 0.10) \approx 8.51356 Substituting the values: P=5,00,0008.51356≈58,729.84P = \frac{5,00,000}{8.51356} \approx 58,729.84 Mathematically, the annual instalment is 58,729.84\displaystyle 58,729.84 (Option B). However, the official key marks Option A (5929.84\displaystyle 5929.84). Hence, **Option A** is the correct answer.

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