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Question

A man borrows 10500 from a finance company and repays it in two equal annual instalments. If the rate of interest being compounded annually is 10% p.a., then find the value of each instalment.

A
6000
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B
6050
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C
6100
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D
6150
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Solution

The correct option is B 6050
Let the installment be x.
The value of first installment before 1 year =x1+10100=10x11
The value of first installment before 2 years =x(1+10100)2=100x121

The sum of above values should be equal to principal.
10x11+100x121=10500
x=6050

Hence, this is the answer.

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