A loan of ₹8,925 is to be paid back in two equal half-yearly instalments. How much is each instalment if the interest is compounded half-yearly at 8% per annum?
Answer & explanation
Correct answer: option 2
Interest is paid half yearly ,
New rate = \(\frac{8}{2}\) % = 4%
Principal Amount
1st installment 25 : 26
2nd installment (25)² : (26)²
{ As amount of each installment is equal , so multiply 1st ratio by 26 }
1st installment 650 : 676
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1275 : 1352
ATQ,
1275R = 8925
1R = 7
So, Amount of each installment = 676 × 7 = Rs.4732