1. The sum of the present values (or the prin
cipals) of all instalments is equal to
(i) Amount (ii) Interest
(iii) Sum borrowed (iv) Instalments
Answers
Given : The sum of the present values (or the principals) of all ins talments
To Find : It is equal to
(i) Amount
(ii) Interest
(iii) Sum borrowed
(iv) Ins talments
Solution:
When a loan is Taken
Sum of All the in st allments = Loan Amount + Interest to be paid
Loan Amount = Sum Borrowed ( Principal Value )
Evert in stallment is composed of two parts , Principal Amount and interest Amount
Present Value of the in stallment is always the principal part of in stallment
Hence if Principal of all ins tallments is added then it will be equal to
Loan Amount or Sum borrowed
Hence Correct option is (iii) Sum borrowed
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