# Solve the following : A man borrowed some money and paid back in 3 equal installments of ₹2,160 each. What amount did he borrow if the rate of interest was 20% per annum compounded annually? - Mathematics and Statistics

Sum

Solve the following :

A man borrowed some money and paid back in 3 equal installments of ₹2,160 each. What amount did he borrow if the rate of interest was 20% per annum compounded annually? Also find the total interest charged. [(1.2)3 = 0.5787]

#### Solution

Given, C = ₹2,160, n = 3 years, r = 20% p.a.

∴ i  = "r"/(100) = (2)/(100) = 0.2

Here, we have to find present value of annuity.

∴ P = "C"/"i"[1 - (1 + "i")^-"n"]

= (2,160)/(0.2)[1 - (1 + 0.2)^-3]

= 10,800[1 – (1.2)–3]
= 10,800[1 – 0.5787]
= 10,800[0.4213]
∴ P = ₹4,550
The man has paid 3 equal instalments of ₹2,160 each.
∴ Total paid value of instalments
= 3 x 2,160
= ₹6,480
Interest = Total paid value of instalments – Present Value
= 6,480 – 4,550
= ₹1,930.

Concept: Annuity
Is there an error in this question or solution?

#### APPEARS IN

Balbharati Mathematics and Statistics 2 (Commerce) 12th Standard HSC Maharashtra State Board
Chapter 2 Insurance and Annuity
Miscellaneous Exercise 2 | Q 4.2 | Page 31