Question

A person borrows $Rs.68,962$ on the condition that he will repay the money with compound interest at $5$% per annum in $4$ equal annual instalments, the first one being payable at the end of the first year. Find the value of each instalment

Answer 1

Let the installment interest be $i$

$V=\frac{A}{i}[1-(1+i{)}^{-n}]$
$V=68962;n=4,i=0.05$
$68962=\frac{A}{0.05}[1-(1+0.05{)}^{-4}]$
$68962\times 0.05=A[1-(1.05{)}^{-4}]$
$3448.1=A(1-0.8227)$
$A=\frac{3448.1}{0.1773}$
$=Rs.19447.83$