Question

Pinky takes a loan of Rs. 10500 at 10% per annum compounded annually which is to be repaid in two equal installments. The first one at the end of one year and the other at the end of the second year. How much will be the installments?
1. 6040
2. 6050
3. 6080
4. 6000

Answer 1

Correct Answer - Option 2 : 6050

Given:

Loan = Rs. 10500

Rate of interest = 10% per annum

Calculations:

Let the installments be x. Then,

According to the question,

⇒ 10,500 = x / (1 + 10/100) + x / (1 + 10/100)²

⇒ 10,500 = {10/11 + 100/121}x

⇒ 10,500 = (110x + 100x) / 121

⇒ x = 105000 × 121 / 210 = 6050

The installments will be of Rs. 6050.