| | Question 32

Ram buy a second hand bike of Rs 13600 as a loan which along with interest is to be paid in two equal annual installment.If the rate of interest is 12.5 % compounded annually, then the value of each installment is:
(A) Rs 8100
(B) Rs 8300
(C) Rs 8500
(D) Rs 9100


Answer: (A)

Explanation: Rate of interest = 12.5% =1/8

                 Principal        Installment
1st year          8                 9                (1)
2nd year          82                92                (2)

Since, installment is equal in both years so multiply (1) by 9
Total principal = 64 + 72 = 136
136 -> 13600
1 -> 100
81 -> 8100
So, each installment equal to Rs 8100.

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