Total amount due to Kabir = Rs. 1,00,000
Number of yearly installments = 4
Since the installments are equal, the amount of each installment is calculated by dividing the total dues by the number of installments.
Amount of each installment = Number of InstallmentsTotal Dues
Amount of each installment = 41,00,000 = Rs. 25,000
Important Note: The interest @ 12% p.a. is charged separately on the unpaid balance and is paid in addition to the installment. The question asks only for the installment amount, not the total payment (installment + interest).
For example:
- At the end of Year 1: Interest on Rs. 1,00,000 = Rs. 12,000 will be paid along with the installment of Rs. 25,000 (Total payment = Rs. 37,000)
- At the end of Year 2: Interest on Rs. 75,000 = Rs. 9,000 will be paid along with the installment of Rs. 25,000 (Total payment = Rs. 34,000)
And so on for the remaining years.
Answer: Option 2: Rs. 25,000