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Question
A sum of money is borrowed and paid back in two equal instalments of rs 882,allowing 5% compound interest. Find the sum borrowed
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Answer
The general formulae for installments in case of compound interest is
P =x/(1+r/100) + x/(1+r/100)^2 ....x/(1+r/100)^n
Here we have to find P given x = 882 r = 5 and n=2
On substituting the values we get
P =882/(1+5/100) + 882/(1+5/100)^2
p = 882*20/21+ 882*400/441
P= 840 + 800 => p = 1640
Hope that helps.
Answer
Download Simple and Compound Interest formulas Sheet for CAT, which gives concepts, tips on this topic.
