Question

Asum of Rs. 11000 was taken as a loan. This is to be repaid in two equal instalments. If the rate of interest be 20% compounded annually, then the value of each instalment is

• A. Rs. 8420
• B. Rs. 7920
• C. Rs. 7200
• D. Rs. 7000

Answer 1

The correct option is C Rs. 7200

Let the value of each instalment be Rs. $x$. Then,

(P.W. of Rs. $x$ due 1 year hence) + (P.W. of Rs. x due 2 years hence) $=$ Rs. 11000

$\therefore \frac{x}{(1+\frac{20}{100})}+\frac{x}{(1+\frac{x}{1+\frac{20}{100}}{)}^2}=11000$

or $\frac{5x}{6}+\frac{25x}{36}=11000$

or $55x=36\times 11000$

or $x=\left(\frac{36\times 11000}{55}\right)=Rs.7200$