Aptitude:- Compound Interest

Question

What annual payment will discharge a debt of Rs.7620 due in 3 years at 50/3% per annum compound interest?

A. 5430

B. 4430

C. 3430

D. 2430

Comments

To the person who is down voting my comments everywhere:-

Do you have anything else left in the world instead of this?

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@rahul what you are doing is calculating the interest on the principal amount and wht the question want is like a loan calculation .

So it would be something like

X * [ (1/(1+r/100)^1) +(1/(1+r/100)^2)......(1/(1+r/100)^n)] = total amount debited.

where x is the principal amount and r is the rate of interest. and n is the no of years

Answer to you question :

x *[1/(1+1/ 6) + 1/(1+1/ 6)^2 + 1/(1+1/ 6)^3]=7620

solve it   you will get something like 

762x=7620*343

x=3430.

hope you got it ?

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@saxena0612,i was using the same logic mentioned here.https://gateoverflow.in/139698/numerical-ability-simple-interest

Answer 1

Let each installment be Rs.x. Let Principal = P, Rate = R% per annum, Time = n years

When interest is compound Annually:     A = P (1 + R / 100) ⁿ

[x / (1 + ( 50 / 3*100) ) ] + [ x / ( 1 + ( 50 / 3*100 )) ^ 2 ]  +  [ x / (1 +( 50 / 3*100)) ^3 ] = 7620

(6x/7)+(36x/49)+(216x/343) = 7620.

294x+252x+216x = 7620*343.

x = (7620*343/762) = 3430.

Amount of each installment=Rs.3430            ans

Answer 2

@rahul sharma 5, what you have is done is wrong because you are calculating according to the concept based on simple interest. On the other hand, in compound interest we calculate on principal amount as well as on any interest that was generated in previ periods that was not paid. Thus, it also called "interest on interest".
In simple interest, only principal amount is considered.