A loan has to be returned in two equal yearly installments each of Rs.44,100. If the rate of interest is 5% pa, compounded equally, then the total interest is paid ?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Rs.6200
Total investments = 88200
t = 0 t = 1 t = 2
44100 / 1.05 44100 44100
= 42000 (t = 1)
= 44100/(1.05)² = 40000 (t = 2)
(t = 1) + (t = 2) = 44000 + 40000
= 82000
Interest = 88200 - 82000
= 6200