An employee borrowed a 3 year loan of ₹ 10,000 at 9% from his employer to buy a motorcycle. If employer…
For a 3-year loan of ₹ 10,000 at an annual interest rate of 9%, the Present Value Interest Factor of an Annuity (PVIFA) is [1 - (1.09)^-3] / 0.09 = 2.5313. Dividing the…
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An employee borrowed a 3 year loan of ₹ 10,000 at 9% from his employer to buy a motorcycle. If employer requires three equal end-of-year repayments, then the annual instalment will be _______.
Answer and explanation
Correct answer B
For a 3-year loan of ₹ 10,000 at an annual interest rate of 9%, the Present Value Interest Factor of an Annuity (PVIFA) is [1 - (1.09)^-3] / 0.09 = 2.5313. Dividing the principal of ₹ 10,000 by 2.5313 yields an equal end-of-year annual repayment instalment of ₹ 3,950.55, or ₹ 3,951.
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UGC NET Management