Kamal took Rs. 6800 as a loan which along with interest is to be repaid in two equal annual installment. If the rate of interest is $$12\frac{1}{2}$$ % compounded annually, then the value of each installment is = ?

A. Rs. 8100

B. Rs. 4150

C. Rs. 4050

D. Rs. 4000

Answer: Option C

Solution(By Examveda Team)

$$\eqalign{ & {\text{Rate of interest}} \cr & {\text{r}} = {\text{12}}\frac{1}{2}\% = \frac{1}{8} \cr} $$

Year	Principal	Installment
⇒ I	8×9 →	9×9	......(i)
⇒ II	64 →	81	......(ii)

Since, installment is equal hence multiply equation (i) by 9
⇒ Total principal = 72 + 64 = 136 units
136 units → 6800
1 units → 50
81 units → 4050
⇒ Each installment = Rs. 4050