Discussion
A loan of ₹ 10,200 is to be paid back in two equal half-yearly instalments. If the rate of interest is 8% p.a., compounded half-yearly, then what is the total interest charged in this scheme?
Answer: B
The total interest charged is ₹ 616. The rate per half-year is 4%. Let each instalment be \(x\); the present value of the two instalments equals the loan: \[ \frac{x}{1.04} + \frac{x}{1.04^{2}} = 10200 \] \[ x\times\frac{1.04 + 1}{1.0816} = 10200 \] \[ x = \frac{10200\times 1.0816}{2.04} = 5408 \] Total paid is \(2\times 5408 = 10816\), so the interest is \(10816 - 10200 = 616\). Simple interest at 8% for one year on 10,200 would be 816, which is not the compounded two-instalment figure.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development