Multiple choice

A man borrows Rs. 21000 at 10% compound interest. How much he has to pay equally at the end of each year, to settle his loan in two years?

  1. Rs. 12000

  2. Rs. 12100

  3. Rs. 12200

  4. Rs. 12300
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let annual payment = x. After 1st year: 21000×1.1 - x = 23100 - x. After 2nd year: (23100-x)×1.1 - x = 25410 - 2.1x = 0. Solving: 25410 = 2.1x, x = 12100. Verification: Year 1: 23100-12100=11000; Year 2: 11000×1.1-12100=12100-12100=0.

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