What yearly portion will release an obligation of Rs. 4600 due in 4 years at 10% straightforward intrigue?

a) 1000

b) 1330

c) 1600

d) None of these

Answer: a 1000

Solution:

Give the yearly portion a chance to be Rs.100. The principal portion will be paid one year from now i.e. 3 years before it is in reality due. The second portion will be paid a long time from now i.e. 2 years before it is in reality due.

The third portion will be paid 1 year before it is in reality due.

The fourth portion will be paid on the day the sum is in reality due.

On the main portion, the intrigue will be paid for a long time, on the second for a long time, on the third for 1 year, on the fourth for multi-year. Altogether an enthusiasm for a long time will be paid (3 + 2 + 1 + 0) on Rs. 100 @ 10%. Intrigue = (100 × 6 × 10)/100 = Rs. 60 and the essential is Rs 100 × 4 = Rs 400. The aggregate credit that can be released is Rs. 400 + 60 = Rs. 460. Here the system of Chain Rule will be connected. I.e. for Rs. 460 the portion required is Rs. 100, for Rs. 4600 the portion required is 4600 × 100/460 = Rs. 1000.