A sum of Rs.9,350 was taken as a loan. This is paid in two equal installments. If the rate of interest is 20% per annum compounded annually, then what is the value of each installment?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Rs.6120.
Principal = 9,350
Rate of interest = 20% = 1/5
Principal : installment
1st = (5 : 6) × 6
2nd = 5 × 5 : 6 × 6
So, principal = 5 × 6 + 5 × 5 = 55
⇒ 55 = 9350 (given)
⇒ 1 = 170
So, each installment = 6 × 6 = 36
⇒ 1 = 170
⇒ 36 = 170 × 36
= 6120