Multiple choice

A sum of Rs. 4,620 is to be paid back in 2 equal annual instalments. How much is each instalment (in Rs.) if the interest is compounded annually at 10% per annum?

  1. 2,552

  2. 2,750

  3. 2,420

  4. 2,662
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For compound interest installments: 4620 = X/(1.1) + X/(1.1)² where X is each installment. This simplifies to 4620 = X(10/11 + 100/121) = X(210/121). Solving: X = 4620 × 121/210 = 22 × 121 = 2662. The formula accounts for the present value of each payment, discounted back to today.

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