Question

sumnima borrowed rs 25500 from nepal bangladesh bank and paid back in two years in two equal installments.If the annual rate of compound interest is 4% p.a., find the amount of each installment.​

Answer 1

Explanation:

Principal = Rs. 25500

Time = 2 years

Rate of interest = 4% p.a. (compounded annually)

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

A = Total amount (principal + interest)

P = Principal

r = Rate of interest (in decimal form)

t = Time (in years)

n = number of times the interest is compounded per year

Here,

A = 25500 (1 + 0.04)^(2*1) = 25500(1.04)^2 = 27648

So, the total interest on the loan is Rs. 27648 - Rs. 25500 = Rs. 2148

Now, the borrower is paying back the loan in two equal installments, so each installment will be:

(Principal + Interest) / Number of installments = (25500 + 2148) / 2 = Rs. 13374

So, each installment will be Rs. 13,374.