Time value of money Rs 4,000 at the end of 3 years =4,000(1+
15
100
)3= Rs 6083.5 Value of first installment at the end of 3 years =1500(1+
15
100
)2= Rs 1983.75 Value of second installment at the end of 3 years =1500(1+
15
100
)= Rs 1725 Value of third installment =1500 Let us assume he has to pay Rs. x to clear all his dues 1983.75+1725+1500+x=6083.5 x=Rs874.75 Answer is option D.