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Ram borrowed a sum of money and returned it in 3 equal Quarterly installments of Rs 17576 each. Find the sum borrowed, if the rate of interest charged was 16 % per annum compounded as installment plan. Find also the total interest charged. [ Calculator, Method and examples ]

Solution:
Your problem `->` Ram borrowed a sum of money and returned it in 3 equal Quarterly installments of Rs 17576 each. Find the sum borrowed, if the rate of interest charged was 16 % per annum compounded as installment plan. Find also the total interest charged.


InstallAmt = `17576`

No of Installment = `3`

Rate = `4`

The amount of `17576` Rs paid at the end of 1st Year

has its principal equal to
` = 17576 / ( 1 + 4 / 100 )`

` = 17576 / ( 104 / 100 )`

` = 17576 × 25/26`

Similarly, for `2^(nd)` Year = `17576 × (25/26)^2`

Similarly, for `3^(rd)` Year = `17576 × (25/26)^3`

`:.` The total of the present values of the `3` Installment is Rs `( 17576 × 25/26 + 17576 × (25/26)^2 + 17576 × (25/26)^3 )`

` = 48775`

Total Amount Paid `= 17576 × 3 = 52728`

Interest = Total Paid - Balance Amount `= 52728 - 48775 = 3953`






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