A sum of Rs. 550 was taken as a loan. This is to be repaid in two equal annual instalments. if the rate of interested be 20% compound annually then the value of each instalment is?

Rs. 421
Rs. 396
Rs. 360
Rs. 350

Correct Answer: Rs. 360

Explanation:

Let the value of each instalment be Rs. x
Then, {x/(1 + 20/100) + x/(1 + 20/100)²} = 550
⇒ 5x / 6 + 25x / 36 =550
⇒ 55x / 36 = 550
∴ x = 360

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