Question

Rahul purchases a bike of amount Rs. 84000. This is to be paid in two equal installments. If the rate interest of 10% per annum compounded annually. Find the value of each installment?

1. Rs. 38,500
2. Rs. 37,500
3. Rs. 37,400
4. Rs. 48,400
5. Rs. 40,500

Answer 1

Correct Answer - Option 4 : Rs. 48,400

Given:

Amount of a bike (P) = Rs. 84000

Rate of interest = 10%

Formula used:

P × {1 + (R/100)}² = I × {1 + (R/100)} + I

Where p = principal

R = rate percentage at compound interest

I = each installment

Calculation:

84000 × {1 + (10/100)}² = I × {1 + (10/100)} + I

⇒ 84000 × (11/10) × (11/10) = I × (11/10) + I

⇒ 840 × 11 × 11 = (21/10) × I

⇒ I = (840 × 10 × 11 × 11)/21

⇒ I = 48400

∴ The value of each installment is Rs. 48,400