A man borrows Rs. 2100 and undertakes to pay back with compound interest @ 10% p.a. in 2 equal yearly installments at the end of first and second year. What is the amount of each installment?
Rs. 1110
Rs. 1310
Rs. 1210
Rs. 1410
Explanation:
Here, (1 + r) = 1 + 110=1110110=1110
Ratio of principals of two instalments = 1 : 10111011 = 11 : 10
Sum of ratios = 11 + 10 = 21
Principal of first instalment = 2100 x 11211121 = Rs. 1100
Therefore, Instalment = Principal of first instalment x (1 + r)
= 1100 x 11101110 = Rs. 1210
Here, (1 + r) = 1 + 110=1110110=1110
Ratio of principals of two instalments = 1 : 10111011 = 11 : 10
Sum of ratios = 11 + 10 = 21
Principal of first instalment = 2100 x 11211121 = Rs. 1100
Therefore, Instalment = Principal of first instalment x (1 + r)
= 1100 x 11101110 = Rs. 1210