A man borrows Rs. 2,550 to be paid back with compound interest at the rate of 4\% per annum by the end of 2 years in two equal yearly instalments. How - Quantitative Aptitude MCQ Competitive Examination 2026 | ExamTest.live

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A man borrows Rs. 2, 550 to be paid back with compound interest at the rate of 4% per annum by the end of 2 years in two equal yearly instalments. How much will each instalment be?

Solution & Step-by-step Explanation

Let each equal yearly instalment be X . The rate of interest is 4% per annum. The present value (PV) of the instalments must equal the borrowed amount: PV = \frac{X}{1 + \frac{4}{100}} + \frac{X}{( 1 + \frac{4}{100} ) ^{2}} = 2550 \frac{X}{\frac{26}{25}} + \frac{X}{( \frac{26}{25} ) ^{2}} = 2550 \frac{25 X}{26} + \frac{625 X}{676} = 2550 Find a common denominator (676): \frac{25 \times 26 \times X + 625 X}{676} = 2550 \frac{650 X + 625 X}{676} = 2550 \frac{1275 X}{676} = 2550 1275 X = 2550 \times 676 X = 2 \times 676 = 1352 Each instalment will be Rs. 1, 352 .

Try it yourself before checking the explanation above.

A man borrows Rs. 2, 550 to be paid back with compound interest at the rate of 4% per annum by the end of 2 years in two equal yearly instalments. How much will each instalment be?

Rs. 1,352

Rs. 1,283

Rs. 1,377

Rs. 1,275

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