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    Question

    What annual installment will

    clear a debt of ₹4,500 due in 5 years at 8% p.a. simple interest?
    A Rs 1,260 Correct Answer Incorrect Answer
    B Rs 2,000 Correct Answer Incorrect Answer
    C Rs 1,600 Correct Answer Incorrect Answer
    D Rs 3,205 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ, To calculate the annual installment that will clear a debt of ₹4,500 due in 5 years at 8% p.a. simple interest, we use the formula for the total amount payable with simple interest: Total Amount Payable=Principal+(Principal × Interest Rate × Time) In this case: Principal = ₹4,500 Interest Rate = 8% (0.08) Time = 5 years Calculating the total amount payable: Total Amount Payable=4,500+(4,500×0.08×5) Total Amount Payable=4,500+(4,500×0.40) Total Amount Payable=4,500+1,800 Total Amount Payable=6,300 Calculating the annual installment:

    Therefore, the annual installment that will discharge the debt of ₹4,500 due in 5 years at 8% p.a. simple interest is Rs. 1,260.

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