CAT Quantitative Aptitude Questions | CAT Simple and compound interest - Installments

CAT Questions | Simple and compound interest | Compound Interest - Installments

The question is from CAT Simple and compound interest. 2IIMs CAT question bank provides you with CAT questions that can help you gear for CAT Exam CAT 2019. Simple Interest and Compound Interest is an important topic for CAT Preparation. This question is about a person paying the amount in three annual installments which is borrowed at 10% compound interest.

Question 15: Krishna borrows Rs. 45K from a bank at 10% compound interet. He repays it in three annual installments that are in arithmetic progression. He ends up paying 54K totally. How much did he pay in year 1?

  1. Rs. 16,500
  2. Rs. 19,500
  3. Rs. 21,000
  4. Rs. 18,000

Online CAT Coaching for CAT 2019


Signup to avail 9 full classes Free


Video Explanation


CAT Coaching in Chennai


Starts Sat, Feb 23, 2019


Explanatory Answer

Method of solving this CAT Question from Simple and compound interest: Find the common difference of AP and you are through.

Let the repayments be Rs "a – d", Rs "a" and Rs. "a + d"
a – d + a + a + d = 54000
3a = 54000
a = 18000
The payment at the end of year 2 is Rs. 18,000.
Borrowed amount = Rs. 45,000
Amount outstanding at the end of Year 1 = (45000 × 1.1) – (18000 – d)
= 31500 + d
Amount outstanding at the end of Year 2 = ((31500 + d) * 1.1) – 18000
= 34650 + 1.1d – 18000 = 16650 + 1.1d
Amount outstanding at the end of Year 3 = ((16650 + 1.1d) * 1.1) = 18000 + d
18315 + 1.21d = 18000 + d
0.21d = – 315
d = –1500
The payments are Rs. 19500, Rs. 18000 and Rs. 16500

The question is " How much did he pay in year 1?"
He paid Rs. 19500 in year 1

Hence, the answer is Rs. 19500.

Choice B is the correct answer.

 

Online CAT Coaching
Try it free!

Register in 2 easy steps and start learning in 30 seconds!

★ Sign up for Free

Already have an Account?

★ Login to Continue

CAT Coaching in Chennai

Next Weekend Batch Starts Sat, Feb 23rd, 2019

★ CAT Coaching Info

CAT Coaching in Chennai

Sign up for a Free Demo of our CAT Coaching in Chennai

★ Schedule Demo


CAT Questions | CAT Quantitative Aptitude

CAT Questions | CAT DILR

CAT Questions | Verbal Ability for CAT


Where is 2IIM located?

2IIM Online CAT Coaching
A Fermat Education Initiative,
10-C, Kalinga Colony, Bobbili Raja Salai
K.K.Nagar, Chennai. India. Pin - 600 078

How to reach 2IIM?

Phone: (91) 44 4505 8484
Mobile: (91) 99626 48484
WhatsApp: WhatsApp Now
Email: prep@2iim.com