What equal instalment of annual payment (in ₹) will discharge a debt that is due as ₹624 at the end of 5 years at 2% per annum simple interest?

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SSC Selection Post 2024 (Matriculation Level) Official Paper (Held On: 26 Jun, 2024 Shift 1)
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  1. 150
  2. 120
  3. 180
  4. 240

Answer (Detailed Solution Below)

Option 2 : 120
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Given:

Total debt = ₹624

Time = 5 years

Rate of interest = 2% per annum

Formula used:

Total amount = P (first year) + (P + 0.02P) (Second year) + (P + 0.04P) (third year) + (P + 0.06P) (fourth year) + (P + 0.08P) (fifth year).

Calculation:

Total amount = 5P + 0.2P = 5.2P

⇒ 5.2P = 624

⇒ P = 624 / 5.2 = 120

∴ The equal annual installment is ₹120.

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