A sum of Rs.P was borrowed and paid back in two equal yearly instalments, each of Rs.35,280. If the rate of interest was 5% per annum and interest is compounding annually, then the value of P is ________.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. Rs.65,600.
Formulae:
P = x/(1 + r/100) + x/(1 + r/100)2 + x/(1 + r/100)3 ......+ x/(1 + r/100)n
Given: x(each installment) = Rs.35280, Rate = 5%, n(time) = 2 years, and P = ?
⇒ P = x/(1 + r/100) + x/(1 + r/100)2
⇒ P = 35280/(1 + 5/100) + 35280/(1 + 5/100)2
⇒ P = 35280/1.05 + 35280/1.052
⇒ P = 33600 + 32000 = Rs.65,600