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?

₹4,732

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