Question

Amit gave his friend Rs. 11000. This was to be
repaid in 2 yearly installments with a rate of in-
terest of 20% compounded annually. How much
would be the value of each installment?​

Answer 1

Amit gave his friend RS 11000. This loan is to be repaid in 3 yearly installment with a rate of interest of 20% compounded annually .

To Find:

How much would be the value of each installment

Solution:

Compound interest

$A = P ( 1 + \frac{r}{100} )^{t}$

Where t is the time period, r is rate and P is principal

A is the amount.

Compound interest is basically concept of successive percentage change.

Amount paid in first installment;

P = Rs 11000   t = 1 year and r = 20%

$A = 11000(1 + 20)^{1}$

A = 13200

Amount paid in second installment;

P = Rs 13200 t = 1 year r = 20%

$A = 13200(1 + 20)^{1}$

A = Rs 15840

Amount paid in third installment;

P = Rs 15840 t = 1 year r = 20%

$A = 15840(1 + 20)^{1}$

A = Rs 19008

Amount paid in first installment: Rs 13200

Amount paid in second installment: Rs 15840

Amount paid in third installment: Rs 19008

Answer 2

Answer:

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