A loan of Rs. 13120 at 5% per annum compound interest is to be repaid in two equal installments at the end of year. Find amount of each installment.

7056

                          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.)          

⇒ 820 → 13120 (given)

⇒ Each Installment = 441 × 16 = 7056

OR

\(\frac{x}{(1 + \frac{5}{100})}\) + \(\frac{x}{(1 + \frac{5}{100})^2}\) = 13120

\(\frac{20}{21}\) x + (\(\frac{20}{21}\))² x = 13120

\(\frac{20x}{21}\) (1 + \(\frac{20}{21}\)) = 13120

x = \(\frac{13120 × 21 × 21}{20 × 41}\) = 7056