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A man borrows money from a finance company and has to pay it back in 2 equal Half Yearly installments of Rs 4945 each. If the interest is charged by the finance company at the rate of 15 % per annum compounded as installment plan, find the principal and t

Solution:
Your problem `->` A man borrows money from a finance company and has to pay it back in 2 equal Half Yearly installments of Rs 4945 each. If the interest is charged by the finance company at the rate of 15 % per annum compounded as installment plan, find the principal and t


InstallAmt = `4945`

No of Installment = `2`

Rate = `15/2`

The amount of `4945` Rs paid at the end of 1st Year

has its principal equal to
` = 4945 / ( 1 + 15/2 / 100 )`

` = 4945 / ( 215/2 / 100 )`

` = 4945 × 40/43`

Similarly, for `2^(nd)` Year = `4945 × (40/43)^2`

`:.` The total of the present values of the `2` Installment is Rs `( 4945 × 40/43 + 4945 × (40/43)^2 )`

` = 381800/43`

Total Amount Paid `= 4945 × 2 = 9890`

Interest = Total Paid - Balance Amount `= 9890 - 381800/43 = 43470/43`






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