Question

A certain loan was returned in two equal annual instalments of INR 8820 each and the rate of interest was
140
5%, compounded annually. The interest (in rupees) paid in this scheme was​

Answer 1

Given :- A certain loan was returned in two equal annual instalments of INR 8820 each and the rate of interest was 5%, compounded annually. The interest (in rupees) paid in this scheme was ?

Solution :-

given that, rate is 5% compounded annually.

So,

→ Rate = 5% = 5/100 = 1/20

Let us assume that, Principal is Rs.20 . Than amount after 1 year will be = 20 + 1 = Rs.21 .

so,

→ First year = 20 ------------------- 21

→ second year = 400 ------------- 441

Let us assume that, installment per year is Rs.441.

than, we have to make installment same of first year also.. we will multiply it by 21 both sides .

therefore,

→ 20 * 21 -------------- 21 * 21

→ 400 ----------------- 441

or,

→ 420 ---------------- 441

→ 400 ---------------- 441

than ,

→ Total principal = 420 + 400 = Rs.820 .

Hence,

→ when installment is Rs.441, principal is = Rs.820

→ when installment is Rs.1 , principal is = (820/441)

→ when installment is Rs.8820 , principal is = (820/441) * 8820 = 820 * 20 = Rs.16400.

So,

→ Total amount paid in 2 installments = 8820 * 2 = Rs.17,640 .

Than,

→ Total interest paid = 17640 - 16400 = Rs.1240. (Ans.)

∴ The interest (in rupees) paid in this scheme was Rs.1240.

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