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?
Answer & explanation
Correct answer: option 3
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