Compound Interest Practice Test 1

Question : 39 of 40

Marks: +1, -0

What annual payment will discharge a debt of Rs. 1025 due in 2 years at the rate of 5% compound interest?

Solution:

Let annual payment be Rs. x; then

x/(1+5/100)+x/(1+5/100)^2=1025

⇒x. 20/21+x. (20/21)^2=1025

⇒x. 20/21×41/21=1025

∴x={1025×21×21}/{20×41}=551.25

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