Question

If a loan of Rs. 30,000 is to be paid in 5 annual installments with interest rate of 12% p.a. then the equal annual installment will be;

Answer 1

Step-by-step explanation:

Given If a loan of Rs. 30,000 is to be paid in 5 annual installments with interest rate of 12% p.a. then the equal annual installment will be

• Now V = Rs 30,000, r = 12% = 12/100 = 0.12 and n = 5
• Now we have V = A / r (1 – (1 + r)^- n
•         So 30,000 = A / 0.12 [1 – (1 + 0.12)^-5]
•            So A = 30,000 x 0.12 / [1 – (1 + 0.12)^-5]
•           So A = 3600 / [1 – (1.12)^-5]
•                    = 3600 / 1 – 1/(1.12)^5
•                   = 3600 / 1 – 1 / 1.7623
•                     = 3600 / 1 – 0.56744
•                    = 3600 / 0.43255
•         Or A = Rs 8322.73

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Answer 2

Thus the early installment will be 9600 Rs.

Step-by-step explanation:

Given data:

• Principal amount (P) = 30,000  Rs
• Interest applied 5 annual installment at the rate of (R) 12% = 18,000  Rs
• Total interest amount for 5 years = 30,000 + 18,000 = 48,000  Rs
• Equated annual instalment = 48,000/5 = 9,600
• 9,600 will be yearly annual instalment.
• Thus the early installment will be 9600 Rs.