A man borrows Rs 2550 to be paid back with compound interest at 4% per annum in 2 equal yearly installments. What is the value of each installment?

Answer: Rs 1352

We use the formula for equal annual installments under compound interest:

Let the installment be Rs. x
Principal (P) = ₹2550
Rate (R) = 4% = 0.04
Time (T) = 2 years
Installments are paid at the end of each year.

Using the formula for compound installment repayment:

$P = frac{x}{(1 + r)^1} + frac{x}{(1 + r)^2}$

Substitute values:

$2550 = frac{x}{1.04} + frac{x}{(1.04)^2}$ $2550 = frac{x}{1.04} + frac{x}{1.0816}$

Take LCM or solve directly:

$2550 = x (\frac{1}{1.04} + \frac{1}{1.0816})$

$2550 = x left(frac{1}{1.04} + frac{1}{1.0816} right)$ $2550 = x (0.9615 + 0.9246) = x (1.8861)$

$2550 = x (0.9615 + 0.9246) = x (1.8861)$ $x = frac{2550}{1.8861} ≈ 1352$

This question appeared in Past Papers (4 times)

ASF Inspector Past Papers (2 times)

FPSC 5 Years Past Papers Subject Wise (Solved With Details) (1 times)

FPSC Past Papers (1 times)

This question appeared in Subjects (1 times)

MATHS MCQS (1 times)

Related MCQs