A loan is to be returned in two equal yearly installments, if the rate of interest is 5% p.a. (compounded annually) and each installment is Rs.19404, then 50% of the total interest charges in the scheme is?

1364

Rate of interest = 5% = \(\frac{1}{20}\)

ATQ,

      Year            Principal      Installment

      I year              20              21             .......(i)

      II year            (20)²        (21)²

Installments for both year is same, so (i) × 21

      Year            Principal      Installment

      I year             420             441

      II year            400            441   

       Total:             820            882

P → 820 , Each Installment → 441

Total interest = 882 - 820 = 62

            441 R → 19404

               1R   →  44 

              62 R → 2728

 50% of 2728 = 1364