Question

A borrows Rs.38000 from moneylender at 20% per annum simple interest for 4 years. If the installments paid in four yearly installments and the ratio between the installments is 1 : 2 : 4 : 6. Find the difference between the interest paid after a year and interest paid after a second year.
1. Rs.780
2. Rs.850
3. Rs.900
4. Rs.1200

Answer 1

Correct Answer - Option 3 : Rs.900

Calculation:

Total sum borrowed = Rs.38000

Total amount to be paid after 4 years = 38000 × 20 × 4/100 + 38000 = Rs.68400

Let first, second, third and forth installments be Rs.a, Rs.2a, Rs.4a and Rs.6a respectively

⇒ 68400 = a + a × 20 × 3/100 + 2a + 2a × 20 × 2/100 + 4a + 4a × 20 × 1/100 + 6a

⇒ 68400 = 13a + 22a/10

⇒ a = 4500

First installment = Rs.4500

Simple interest for first year = 38000 × 20 × 1/100 = Rs.7600

Amount paid after first year = 38000 - 4500 = Rs.33500

Simple interest for second year = 33500 × 20 × 1/100 = Rs.6700

∴ Required difference = 7600 - 6700 = Rs.900

Simple interest for first year = P × R × 1/100

Simple interest for the second year = (P - first installment) × R × 1/100