Find the amount of equal annual instalment, which will discharge a debt of Rs.40,376 due in 4 years at the rate of 2% p.a. simple interest.

Let each equal annual installment be x.
The total amount cleared by these installments paid at the end of each year over 4 years consists of the installments themselves plus the simple interest accrued on them until the end of the 4th year.

The 1st installment earns interest for (4−1)=3 years.

The 2nd installment earns interest for (4−2)=2 years.

The 3rd installment earns interest for (4−3)=1 year.

The 4th installment earns interest for (4−4)=0 years.

The formula for total payment equals the total debt:

x+(x+
100
x×2×1
​
)+(x+
100
x×2×2
​
)+(x+
100
x×2×3
​
)=40376
4x+
100
2x
​
(1+2+3)=40376
4x+
100
12x
​
=40376
100
412x
​
=40376
412x=4037600
x=
412
4037600
​
=9800
The annual installment amount is Rs.9,800.