Question

A man borrows ₹ 20,000 at 12% per annum, compounded semi-annually and agrees to pay it in 10 equal semi-annual installments. Find the value of each installment, if the first payment is due at the end of two years.

Answer 1

V = ₹ 20,000, `i = (12)/(2 xx 100)` = 0.06%

n = 10, A = ?

m = `1 (1)/(2)` terms = 3 terms

So, V = `("A")/(r(1 + r)^m)` [1 - (1 + r)^-n ]

20 ,000 = `("A")/(0.06(1.06)^3)` [1 - [1 - (1.06)^-10 ]

`(20000)/(6.1796710132)` = A

A = ₹ 3236.42