A man borrows 21000 Rs. at 10% compound interest. How much he has to pay annually at the end of each year, to settle his loan in two years?
Q. A man borrows 21000 Rs. at 10% compound interest. How much he has to pay annually at the end of each year, to settle his loan in two years?
Answer: 12100 Rs.
Notes: If each instalment be x, then present worth of first instalment $latex = \frac{x}{1+\frac{10}{100}} = \frac{10x}{11}&s=1$ Present worth of second instalment $latex = \frac{x}{\left ( 1+\frac{10}{100} \right )^{2}} = \frac{100x}{121}&s=1$ $latex \therefore \frac{10x}{11}+\frac{100x}{121}=21000&s=1$ $latex => \frac{110x+100x}{121} = 21000&s=1$ $latex => 210x = 21000\times 121&s=1$ $latex => x = \frac{21000\times 121}{210} = 12100\ Rs.&s=1$ Hence option [B] is correct answer.