A loan is to be repaid in two equal yearly installments. If the rate of interest is 10% per annum, compounded annually, and each installment is ₹6,897, then find the total interest charged.
Answer & explanation
Correct answer: option 2
Rate of interest = 10%
Principal Amount
1st installment 10 : 11
2nd installment 10² : 11²
{ As installments are equal, so multiply ratio of first installment by 11 }
1st installment 10×11 : 11 ×11
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210 : 242
ATQ,
121R = 6897
1R = 57
Interest earned = ( 242 - 210 )R = 32R
= 32 × 57
= Rs. 1824