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A loan of Rs 12300 at 5 per annum compound interest...

This question belongs to Arithmetic Ability Compound Interest
Compound Interest
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A loan of Rs. 12300 at 5% per annum compound interest, is to be repaid in two equal annual installments at the end of every year. Find the amount of each installment ?

Answer & Solution
Correct Answer: Option B
$$5\% = \frac{1}{{20}} = \frac{{21 \to {\text{ Installment}}}}{{20 \to {\text{ Principal}}}}$$
Year         Principal         Installment  
⇒ I 20×21 → 21×21 ......(i)
⇒ II 400→ 441 .....(ii)
Since, installment is equal, hence multiply equation (i) by 21
⇒ Total principal = 420 + 400 = 820
⇒ 820 units = Rs. 12300
⇒ 1 units = Rs. 15
⇒ 441 units = Rs. 6615
∴ Each installment = Rs. 6615
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