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Anish got a loan of Rs. 6000 for the repair of his house. The loan is to be paid back in 3 annual installments. How much is each installment respectively if the interest is calculated annually on the balance at 5% rate and is included in the cash installment?

Anish got a loan of Rs. 6000 for the repair of his house. The loan is to be paid back in 3 annual installments. How much is each installment respectively if the interest is calculated annually on the balance at 5% rate and is included in the cash installment? Correct Answer Rs. 2300, Rs. 2200 and Rs. 2100

⇒ Anish pays Rs. (6000/3) i.e. Rs. 2000 every year together with the interest on the balance for 1 year

⇒ Interest on Rs. 6000 for first year is,

⇒ S.I. for first year = (P × T × R)/100 = (6000 × 5 × 1)/100 = Rs. 300

⇒ Instalment at the end of first year = Rs. (2000 + 300) = Rs. 2300

⇒ Balance at the end of first year = Rs. (6000 – 2000) = Rs. 4000

⇒ Interest on Rs. 4000 for second year is,

⇒ S.I. for second year = (P × T × R)/100 = (4000 × 5 × 1)/100 = Rs. 200

⇒ Instalment at the end of second year = Rs. (2000 + 200) = Rs. 2200

⇒ Balance at the end of second year = Rs. (4000 – 2000) = Rs. 2000

⇒ Interest on Rs. 2000 for third year is,

⇒ S.I. for third year = (P × T × R)/100 = (2000 × 5 × 1)/100 = Rs. 100

⇒ Instalment at the end of third year = Rs. (2000 + 100) = Rs. 2100

∴ The three installments are Rs. 2300, Rs. 2200 and Rs. 2100 respectively

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