A loan has to be paid in two equal installments each of Rs. 44100. If the rate of interest is 5% p.a., compounded annually, then half of interest paid is?
Answer & explanation
Correct answer: option 2
P : installment
1st year 20 : 21 ...............(i)
2nd year (20)2 : (21)2
As installments are equal so multiply (i) by 21
P : installment
1st year 420 : 441
2nd year 400 : 441
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820(Total) 441 (each Inst.)
⇒ 441 → 44100 (given)
⇒ P = 820 × 100 = 82000
Total amount paid = 44100 × 2 = 88200
half of interest = \(\frac{1}{2}\)(88200 - 82000 ) = 3100