Question
Download Solution PDFA sum of Rs. 4,620 is to be paid back in 2 equal annual instalments. How much is each instalment (in Rs.) if the interest is compounded annually at 10% per annum?
Answer (Detailed Solution Below)
Detailed Solution
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Rate of interest = 10% (per annum)
Fraction value = 10% = 1/10
∴ Principal = 10; Interest = 1
So, total installment = 10 + 1 = 11
| Time Period | Principal |
Equal instalment per annum |
| 1st year | 10 × 11 = 110 | 11 × 11 = 121 |
| 2nd year | 102 = 100 | 112 = 121 |
|
Total principal = 110 + 100 = 210 |
So, 210 → Rs. 4620
∴ 121 → (4620/210) × 121 = Rs. 2662
∴ The each instalment (in Rs.) is Rs. 2662
Alternate Method
Given:
Total amount = Rs. 4620
Rate of interest = 10%
Total number of installment = 2
Formula used:
Installment =
Where, P = Total amount; R = Rate of interest; n = Number of installment
Calculation:
Installment =
= 4620/[(10/11) + (10/11)2]
= 4620/[(10/11) + (100/121)]
= 4620/(210/121)
= 4620 × (121/210)
= 2662
∴ The each instalment (in Rs.) is Rs. 2662
Last updated on Jun 13, 2025
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