A sum of Rs. 1275 is borrowed at 4% pa compound interest and paid back

1.	A sum of Rs. 1275 is borrowed at 4% pa compound interest and paid back in 2 equal annual installments. What is the amount of each installment?1. Rs. 6762. Rs. 7003. Rs. 6504. Rs. 5005. Rs. 850
Answer» Correct Answer - Option 1 : Rs. 676 Given: The principal is Rs. 1275 Rate of interest is 4 % Number of installment is 2. Formula used: P( 1+ R/100)ⁿ = X( 1+ R/100)^n-1 + X( 1+ R/100)^n-2 + X( 1+ R/100)^{n -3}+ X( 1+ R/100)^n-4 + ---- Where, P = principal R = Rate n = number of installments X = amount of installment Calculation: Let the value of installment be Rs. X ⇒ 1275(1 + 4/100)² = X(1 + 4/100)^2-1 ⇒ 1275 × 104/100 × 104/100 = (X + 104 X/100) ⇒ 1275 × 104/100 × 104/100 = 204 X/100 ⇒ X = 676 ∴ The value of installment is Rs. 676.

A sum of Rs. 1275 is borrowed at 4% pa compound interest and paid back in 2 equal annual installments. What is the amount of each installment?1. Rs. 6762. Rs. 7003. Rs. 6504. Rs. 5005. Rs. 850

Answer» Correct Answer - Option 1 : Rs. 676

Given:

The principal is Rs. 1275

Rate of interest is 4 %

Number of installment is 2.

Formula used:

P( 1+ R/100)ⁿ = X( 1+ R/100)^n-1 + X( 1+ R/100)^n-2 + X( 1+ R/100)^{n -3}+ X( 1+ R/100)^n-4 + ----

Where,

P = principal

R = Rate

n = number of installments

X = amount of installment

Calculation:

Let the value of installment be Rs. X

⇒ 1275(1 + 4/100)² = X(1 + 4/100)^2-1

⇒ 1275 × 104/100 × 104/100 = (X + 104 X/100)

⇒ 1275 × 104/100 × 104/100 = 204 X/100

⇒ X = 676

∴ The value of installment is Rs. 676.

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