An electric bike is available for ₹1 lakh. A customer has to pay a down payment of ₹20,800, followed by 4 equal installments. If the interest rate is 25% per annum simple interest, calculate the 4 annual installments.

Correct option is C

Given:

Total value of electric bike = ₹1 lakh

Down payment paid = ₹20,800

Rate of  interest = 25%

Time = 4 years

Formula Used:

​$$SI = \frac{P\times R\times T}{100}$$​​

Solution:

Principle amount =1,00,000 - 20800 = ₹79,200

After 4 years total amount to be paid in installments:

=$$P + \frac { P \times R \times T}{100}$$​​

=$$79200 + \frac{79200 \times 25 \times 4}{100}$$​​

= 79200 + 79200

= ₹1,58,400

Let the installment be x

1^st year = $$x + \frac{x\times 25\times 3}{100}$$​​

2^nd  year = $$x + \frac{x\times 25\times 2}{100}$$​​

3^rd  year = $$x + \frac{x\times 25\times 1}{100}$$​​

4^th year = $$x$$​​

Then,

$$x + \frac{x\times 25\times 3}{100}+ x + \frac{x\times 25\times 2}{100} +x+ \frac{x\times 25\times 1}{100}+x =158400$$​​

​$$4x +\frac{3x}{2} =158400$$​​

​$$11x=158400\times2$$​​

​$$x=₹28800$$​​