Question

The formula for finding the annual installment, when A is the amount taken on loan, where r% is the rate of interest, n is the number of installments, is:
1. \(\text{Installment} = \frac{A}{{1 - {{\left( {\frac{{100}}{{100 + r}}} \right)}^n}}} \times \frac{r}{{100}}\)
2. \(\text{Installment}= \frac{A}{{1 + {{\left( {\frac{{100}}{r}} \right)}^n}}} \times \frac{r}{{100}}\)
3. \(\text{Installment}= \frac{{100A}}{{{r^n}}}\)
4. \(\text{Installment} = \frac{{rnA}}{{100}}\)

Answer 1

Correct Answer - Option 2 : \(\text{Installment}= \frac{A}{{1 + {{\left( {\frac{{100}}{r}} \right)}^n}}} \times \frac{r}{{100}}\)

Formula:

The formula for finding the annual installment, when A is the amount taken on loan, where r% is the rate of interest, n is the number of installments, is:

\(\text{Installment}= \frac{A}{{1 + {{\left( {\frac{{100}}{r}} \right)}^n}}} \times \frac{r}{{100}}\)

In an installment scheme, the buyer pays more because in addition to installment a buyer has to pay interest on it monthly or yearly.