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

Answer: (B)

Rs 9,200

Answer 2

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)