Question

A sum of rs. 7500 is to be paid back in 3 annual installments. How much is each installment, if the interest is compounded annually on the balance at 4% and is to be included in each installment?

Answer 1

Answer: 2,310 is the amount of each instalment

Step-by-step explanation: each instalment as X. To find it we have to know the

Present worth = X/(1+(r/100))^n r is interest n is years

Pw of x in 1 year + pw of x in 2yrs + pw of x in 3 years = 7500

X/(1+(4/100)) + X/(1+(4/100))^2 + X/(1+(4/100))^3 = 7500

By solving we get X as 2,310

Answer 2

since rs 7500 is to be returned back in 3 installment.so we distribute it in 3 equal parts of rs 2500 then finding the interest for individual years and adding the interest with rs 2500