# QA – Placement Quizzes | Compound Interest | Question 13

A sum of money is borrowed and paid back in two annual installments of Rs. 882 each allowing 5% compound interest. The sum borrowed was:**(A)** 1540**(B)** 1640**(C)** 1580**(D)** 1680**Answer:** **(B)****Explanation:** Principal = Present worth of the installment at the end of first year + Present worth of the installment at the end of second year

= 882/(1 + 5%) + 882/(1 + 5%)^2

= 882/(1 + 5/100) + 882/(1 + 5/100)^2

= 882/(105/100) + 882/(105/100)^2

= 882/(21/20) + 882/(21/20)^2

= 882*20/21 + 882*400/441

= 42*20 + 2*400

= 840 + 800

= 1640.

Quiz of this Question

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