Question

A loan of Rs. 80,000 is taken and it has to be repaid in 10 equal installments payable yearly at the beginning of the year. Based on 6% annual effective rate of interest. Determine the amount of installments.

Answer 1

Answer: Amount of one installment = Rs12800

Amount of all installments =Rs 1,20,000

Step-by-step explanation:

Loan amount =80000

Installment amout is equal and number of installments = 10

So, One installment = 80000/10 = 8000

Interest rate = 6%

Then, amount of interest = 80000 * 6 / 100

Amount = Rs 4,800

Total amount of one installment = 8000+4800 =12, 800

And total amount of all installments = 12,800 * 10 = 1,20,000 (Answer)