Multiple choice

A sum of money is borrowed and paid back in two annual instalments of Rs. $882$ each allowing $5\%$ compound interest. The sum borrowed was ________.

  1. Rs. $1620$
  2. Rs. $1640$
  3. Rs. $1680$
  4. Rs. $1700$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let P be the sum. P = 882 / (1.05) + 882 / (1.05)^2 = 840 + 800 = 1640.

AI explanation

To find the principal borrowed with two equal annual installments at 5% compound interest, we calculate the present value of each installment. The present value of the first installment is 882 divided by 1.05, which equals 840. The present value of the second installment is 882 divided by 1.05 squared, giving 800. Adding these two present values together, 840 plus 800 equals Rs. 1640.

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