Question

A trader owes a merchant Rs 10,028 due 1 year hence. The trader wants to settle the account after 3 months. If the rate of interest is \(12\%\) per annum, how much cash should he pay?

• A. Rs 9,025
• B. Rs 9,200
• C. Rs 9,600
• D. Rs 9,560

Answer 1

The Correct Option is B

Let the present value of money be \(x\)

\(\frac{x\times12}{100}+x=10028\)

\(x=\frac{10028}{1.12}\)

This amount after 3 months

\(\frac{\frac{10028}{1.12}\times12\times3}{12\times100}+\frac{10028}{1.12}\)

\(\frac{10028\times3}{1.12\times100}+\frac{10028}{1.12}\)

\(=\frac{10028\times103}{112}=9222.17\approx Rs9200\)
The correct option is (B)