Question

A sum of Rs. 1100 was taken as a loan. This is to be repaid in two equal installments. If the rate of interest be 20% compounded annually, then the value of the each installment is

• A. Rs. 842
• B. Rs. 792
• C. Rs. 720
• D. Rs. 700

Answer 1

The correct option is C Rs. 720

Let the value of each installment be Rs. x

Then,
(P.W. of Rs. $x$ due 1 year hence) + (P.W. of Rs. $x$ due 2 years hence) = Rs. 1100

$=\frac{x}{(1+\frac{20}{100})}+\frac{x}{{(1+\frac{20}{100})}^2}=1100$

$or\frac{5x}{6}+\frac{25x}{36}=1100$

$55x=36\times 1100$

$thereforex=\left(\frac{36\times 1100}{55}\right)=Rs.720$