Question

A person borrows a sum of ₹10,920 at 10% p.a. compound interest and promises to pay it back in two equal annual instalments. The interest to be paid by him under this instalment scheme is:

• A. ₹1,646
• B. ₹1,664
• C. ₹1,676
• D. ₹1,684

Hint:

For compound interest, use the formula \( A = P \left(1 + \frac{r}{100}\right)^t \) to calculate the total amount, then subtract the principal from it to get the interest.

Answer 1

The Correct Option is A

Let the two equal annual instalments be \( x \). The total interest for two years can be found using the compound interest formula: \[ A = P \left(1 + \frac{r}{100}\right)^t \] Substituting the values: \[ A = ₹10,920 \quad \text{and} \quad r = 10% \] We calculate the total interest and subtract the principal amount. Thus, the interest is ₹1,646.