Question

A sum of rupees 16400 is borrowed to be paid back in two years by two equal annual installment allowing 5% compound interest find the annual payment.


Plz answer

Answer 1

Answer: 8820

Step-by-step explanation:

Let x be the instalment amount Interest = 5% i.e 1+ r/100 = 1+ 5/100 = 21/20

Present value of Rs.x due 1 year =x/21/20

Present value of Rs.x due at the 2 years = x / (21/20)2

∴ {x / (21/20)} + { x / (21/20)2 } = 16400

20x / 21 + 400x / 441 = 16400

x(420+400)=16400×441

∴x=16400×441/820

∴x=Rs.8820

∴The annual payment =Rs.8820