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A loan of Rs 2000 is to be paid back in 3 equal annual installments. How much is each installment, to the nearest whole rupee, if the interest is compounded annually at 12 ½ p.a.?

A.	Rs. 480	B.	Rs. 320
C.	Rs 840	D.	Rs. 230

Answer and Explanation

Answer:Rs 840

Explanation:
Amount to be paid after three years 200(1 + 25/200)3 = Rs 2847.66
Let the annual installment be Rs x
x(1+25/200)2 + x(1 + 25/100) + x = 2847.66
x= Rs 840

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