A man borrows ₹ 5100 to be paid back with compound interest at the rate of 4 % pa by the end of 2 yr in two equal yearly installments. How much will each installment be?

₹ 2704
₹ 2800
₹ 3000
₹ 2500

Correct Answer: ₹ 2704

Explanation:

Let each installment be ₹ N .
Then , according to the question ,
N/(1 + 4/100 ) + N/(1 + 4/100 )² = 5100
⇒ 25N/26 + 625N/676 = 5100
⇒ 1275N = 5100 x 676
∴ N = (5100 x 676)/1275 = ₹ 2704

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