Question

Emily takes a loan of Rs 4100 from George who lends her money at 10% p.a. compound interest which she needs to pay in two equal installments after every 6 months. Find the value of installment.
1. 2100
2. 2510
3. 2205
4. 2756

Answer 1

Correct Answer - Option 3 : 2205

Given:

Loan = Rs 4100

Interest = 10% p.a.

Formula used:

Let installment be X

P = X/ [1 + (R/ 100)] + X/ [(1 + R/ 100)2]

Calculation:

4100 = X/ [1 + (R/ 100)] + X/ [(1 + R/ 100)2]

⇒ 4100 = 20X/ 21 + (400X/ 441) (∵ 5/100 = 1/ 20)

⇒ 4100 = 20X/ 21 × (1 + (20/ 21))

⇒ 4100 = 20X/21 × (41/21)

⇒ X = 441 × 5 = 2205