Rajnish borrowed ₹1,500 from a bank and repaid the entire amount with interest in two
equal annual instalments, the first instalment being paid a year after Rajnish borrowed
from the bank. If the rate of interest was 40% per annum, compounded annually, then
what was the value (in ₹) of each instalment paid by Rajnish?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. 1225
Given that
Rajnish borrowed ₹1,500 from a bank and repaid the entire amount with interest in two
equal annual installments
Let the each instalment = x Rs
As we know that
[x/(1 + rate/100)] + [x/(1 + rate/100)2] = Total borrowed = 1500
[x/(1+ (40/100)] + [x/(1 + (40/100)2] = 1500
5x/7 + 25x/49 = 1500
60x/49 = 1500
x = 1225 Rs
Hence, Each instalments = 1225 Rs