A loan has to be returned in two equal yearly instalments each of Rs. 44,100. If the rate of interest is 5% p.a., compounded annually, then the total interest paid is:

Solution (By Examveda Team)

5% = $$\frac{1}{{20}}$$
\[\begin{array}{*{20}{c}} {}&{{\text{Principal}}}&{}&{{\text{Installment}}}&{} \\ {{{\text{I}}^{{\text{st}}}}{\text{ year}} \to }&{{{20}_{ \times 21}}}&:&{{{21}_{ \times 21}}}&{} \\ {{\text{I}}{{\text{I}}^{{\text{nd}}}}{\text{ year}} \to }&{400}&:&{441}&{ \to 44100} \end{array}\]
1 unit → 100
Principal = 400 + 420 = 820
Total installment = 441 × 2 = 882
Interest = 882 - 820
= 62 × 100   [1 unit = 100]
= 6200