A loan is to be returned in two equal yearly installments. If the rate of interest is 10% p.a. compounded annually and each installment is Rs. 6534 then, the total interest charged (in Rs.) is:
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 1728.
P = 1/(1 + R/100) + 1/(1 + R/100)2
P = 6534/1.1 + 6534/1.21
P = (5940 + 5400) = 11340
Interest earned = (2 × 6534 - 11340) = 1728