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?
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
