A sum of money was borrowed and paid back in two equal annual instalments of ₹980, allowing 4% compound interest. The sum (in ₹, to the nearest tens) borrowed was:
Answer & explanation
Correct answer: option 1
Annual Instalment = Rs.980
4% = \(\frac{1 }{25}\)
25 : 26 -----(1)
25² : 26²
Multiply equation (1) by 11.
25×26 : 26²
Total principal = 625 + 650 = 1275
ATQ,
26² × R = 980
1R = \(\frac{980}{676}\)
1275× R = 1275 × \(\frac{980}{676}\)
= 1848.37
= 1850 ( Rs. in nearest tens )