Question
What annual payment will discharge a debt of Rs. 1025 due in 2 years at the rate of 5% compound interest ?
Answer: Option B
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Let each instalment be Rs. `x` , Then ,
`(x)/((1 + 5/100)) + (x)/((1 + 5/100))^2 = 1025`
`hArr (20x)/(21) + (400x)/(441) = 1025`
`hArr 820x = 1025 xx 441`
`hArr x = ((1025 xx 441)/(820)` = 551.25
So, value of each instalment = Rs. 551.25.
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