NIFT PG 2020 Question Paper with solutions

Question : 28 of 150

Marks: +1, -0

A sum of money is paid back in two annual instalments of

₹ 17640

each, allowing

5 \%

compound interest compounded annually. The sum borrowed was

Solution:

Let the principal for Ist and IInd years be

P_{1}

and

P_{2}

.
According to the question.

17640=P_{1}(1+\;{5}/{100})^{1} ⇒ 17640=P_{1}(1+\;{1}/{20})

⇒ 17640=P_{1} × \;{21}/{20} ⇒ P_{1}=840 × 20

⇒ P_{1}=₹ 16800

Again,

17640=P_{2}(1+\;{5}/{100})^{2}

⇒ \;\; 17640=P_{2} × \;{21 × 21}/{20 × 20}

⇒ \;\; P_{2}=40 × 20 × 20=₹ 16000

∴

Total sum

=P_{1}+P_{2}=16800+16000=₹ 32800

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