Surekha borrowed a sum of money and returned it in two equal annual installments of Rs. 5,547 each. If the rate of interest was 7- 1/2% p.pa compounded yearly, then the total interest paid by her was
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Rs 1,134
Concept
P = [(Installment)/(1 + R/100)1 + (Installment)/(1+R/100)2]
Application
P = [5547/(43/40)1 + 5547/(43/40)2]
P = 5547(40/43 + 1600/1849)
P = 5547(3320/1839)
P = Rs. 9960
Total Installment = 5547 × 2 = Rs. 11094
Total Interest = Rs(11094 - 9960) = Rs. 1134