Banker's Discount Practice Test 1

Question : 40 of 40

Marks: +1, -0

A sum of Rs. 2550 is borrowed to be paid back in two years by two equal annual payments, 4% compound interest being allowed. What is the annual payment?

Rs. 1352
Rs. 135.20
Rs. 1200
Rs. 120

Validate

Solution:

Let x be the annual payment
The present value of the Ist payment = Rs.

x/ (1+4/100)

=25/26x

The present value of the IInd payment

=x/(1+4/100)^2={625x}/676

Now,

25/26x+625/676x=2550

⇒1275/675x=2250

⇒ x = \Rs. 1352

∴ The annual payment = Rs. 1352

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