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A person takes loan of ₹ 4,000 on the condition that he would pay it in the monthly instalment of 500. He has to pay interest @ 6% on the outstanding balances, then find out the average rate of interest received by the creditor.
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3 3 % Per annum 8 -
2 3 % Per annum 8 -
4 3 % Per annum 8 -
3 1 % Per annum 8
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Correct Option: A
Here , Monthly instalment = ₹ 500
Total loan = ₹ 4000
∴ Number of instalments = 4000 ÷ 500 = 8
Once the payment starts, outstanding balances will go on diminishing.
Hence, from point of view of interest, principal = 4000 + 3500 + 3000 + 2,500 + 2000 + 1500 + 1,000 + 500 = ₹ 18,000
| ∴ Interest on 18,000 for 1 month at 6% P.a. = | = ₹ 90 | |
| 100 × 12 |
| Average rate of interest = | |
| P × T |
| T = 8 months = | Years. | |
| 12 |
| Rate = | |
| 4000 × 8 |
| R = | % = 3 | % | ||
| 8 | 8 |
