Read the following passage and answer the question.

X, Y, Z were partners sharing profits and losses in the ratio of 4:3:2. Z died on 30 June 2020 on which date his capital is ₹1,00,000, and after doing all adjustments his capital balance will be ₹1,74,000. His share of profit from the closing of last year till his death is ₹7,500. Z's executor is paid ₹14,000 on Ist July 2020 and the balance in 2 equal annual installments starts from 30th June,2021 with interest @ 6%p.a. Accounts are closed on 31st March.

What will be the amount of interest that is paid on the Ist installment?

₹9,600

The correct answer is option 2- ₹9,600.

Total due balance to Z is 1,74,000 which is transferred to executor account. from this balance 14,000 is paid immediately and the Balance is paid in 2 equal installments and the amount paid to the executor is ₹1,60,000. This will be paid into 2 equal annual installments means 80,000 each year plus interest. So, on ist installment principal amount of 80,000 and interest of 9,600 is paid.

Z's Executor Account