Question

A sum of Rs. 5170 was borrowed at 20% per annum compound interest and paid back in two years in two equal annual installments. What was the amount of each installment?
1. Rs. 4456
2. Rs. 3384
3. Rs. 3890
4. Rs. 3367
5. Rs. 3456

Answer 1

Correct Answer - Option 2 : Rs. 3384

Calculation:

Let each installment be x.

⇒ x/(1 + 20/100) + x/(1 + 20/100)² = 5170

⇒ x/(6/5) + x/(6/5)² = 5170

⇒ 5x/6 + 25x/36 = 5170

⇒ (30x + 25x)/36 = 5170

⇒ 55x/36 = 5170

⇒ x = 5170 × 36/55

⇒ x = 3384

So, the amount of each installment is Rs. 3384.