INSTALLMENTS When a borrower pays the sum in parts rather than a single payment then we say that installments are paid. . Generally these parts are equal at equal interval of time We will use the modified method rather than conventional method because of the long formula and calculation work
FORMULA FOR INSTALLMENTS +100 + (1+r/100)2 + (1+r/100)3 +.. (1+1/1 Loan Amount(P 1+1001+/100)2 (r/100)3 (1+/100)" Where , x is the value of each installment.
Q1. A sum of Rs. 5300 was taken as a loan. This is to be paid back in two equal installments. If the rate of interest be 12% compounded annually, the value of each installment is 12 3 Rate = 12% =-=- 100 25 P= 25 units, A-28 units Principal 25 28 = 730 252-6 Amount 28 28 = 784 282 784 25 J + = 1325 1325 units = Rs.5300 , !units Rs.4 Installment- 784x4 Rs.3136
Q2.A sum of Rs.210 was taken as a loan .lt was repaid as two equal installment. If the rate of interest be 10% compounded annually, then the value of each installment and the amount to be repaid? Rate = 10% = So , P= 10 units, A=11 units. 10 Principal 10 11 110 102 100210 units Amount 11 11 = 121 112-121 | . +-242 units 210 units= Rs.210 1unit = Rs.1 Installment Rs.121 Amount Rs.242
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