A sum of Rs.6,000 is to be paid back in two equal annual installments; each installment is to be paid at the end of every year. How much is each installment if the interest is compounded annually at 2% p.a.? (Rounded off up to two decimal places)
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Rs.3,090.30.
Given:
Rate = 2%
Sum = Rs 6000
Calculations:
Let each installment be x
Principal amount for 1st installment = x/(102/100) = x/(51/50)
Principal amount for 2nd installment = x/(102/100)2 = x/(51/50)2
⇒ 1st installment + 2nd installment = 6000
⇒ (x/(51/50)) + (x/(51/50)2) = 6000
Hence, the value of each installment, x = 3090.30