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?

3100

                          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

                  ------------------------------------

                        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