Question

A sum of money is borrowed and paid back in two equal annual installments of Rs 882 allowing 5% compound interest. Find the sum.

Answer 1

The sum borrowed= Present Worth of Rs.882 due 1 year hence + Present Worth of Rs.882 due 2 year

$\Rightarrow \frac{882}{(1+\frac{5}{100}{)}^1}+\frac{882}{(1+\frac{5}{100}{)}^2}$

$\Rightarrow \frac{882}{\frac{105}{100}}+\frac{882}{(\frac{105}{100}{)}^2}$

$\Rightarrow \frac{882\times 20}{21}+\frac{882\times 20\times 20}{21\times 21}$

$\Rightarrow 840+800=1640$