Answer the questions from based on following paragraph.

Preeti, Kabir and Shershah are partners in a firm. Kabir retires from the firm. On his date of retirement, ₹1,00,000 became due to him. Preeti and Shershah promised to pay him in four yearly equal installments plus interest @ 12% p.a. on the unpaid balance every year at the end of the year, to which he agreed.

The amount of interest payable at the end of fourth year will be:

₹3,000

The correct answer is option 3- ₹3,000.

Total due amount = 1,00,000
Installments = 4
Each installment = 1,00,000/4
                         = 25,000

* Ist installment = 25,000 
Remaining balance after Ist installment = 1,00,000 - 25,000
                                                         = 75,000

* 2nd installment = 25,000
Remaining balance after 2nd installment = 75,000 - 25,000
                                                            = 50,000

* 3rd installment = 25,000
Remaining balance after 3rd installment = 50,000 - 25,000
                                                          = 25,000

* 4th installment = 25,000
Interest payable with 4th installment = 25,000 x 12/100
                                                      = 3,000

So, the amount of interest payable at the end of fourth year will be 3,000.