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:

1,850

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 )