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A loan of 102000 is to be paid back in two equal annual instalments . if the rate of interest is 4% p.a, compounded annualy then the total interest charged under instalment plan is?
Most Upvoted Answer
A loan of 102000 is to be paid back in two equal annual instalments . ...
A=V÷P(n, i)
p(2, 4%) = (1+0.14) ^2-1÷(1+0.14) ^2*0.14
=1.886094
A= 102000/1.886094=54080
2equal annual installments =54080+54080=108160
108160-102000=6160 -- total interest
Community Answer
A loan of 102000 is to be paid back in two equal annual instalments . ...
Calculation of Total Interest Charged Under Instalment Plan

Given information:
- Loan amount = 102000
- Instalment period = 2 years
- Rate of interest = 4% p.a
- Interest compounded annually

To calculate the total interest charged under instalment plan, we need to follow the below steps:

Step 1: Calculate the annual instalment amount
- Since the loan is to be paid back in two equal annual instalments, we can divide the loan amount by 2 to get the annual instalment amount.
- Annual instalment amount = 102000 / 2 = 51000

Step 2: Calculate the interest for the first year
- To calculate the interest for the first year, we need to use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount at the end of the period, P is the principal amount, r is the rate of interest, t is the time period, and n is the number of times the interest is compounded per year.
- Here, P = 102000, r = 4%, n = 1 (since interest is compounded annually), t = 1 (since we are calculating interest for the first year).
- Putting these values in the formula, we get: A = 102000(1 + 0.04/1)^(1*1) = 106080
- So, the interest for the first year is: 106080 - 102000 = 4080

Step 3: Calculate the interest for the second year
- To calculate the interest for the second year, we need to use the same formula, but with a different value of t.
- Here, P = 51000 (since we are paying back the loan in two equal instalments), r = 4%, n = 1, t = 1.
- Putting these values in the formula, we get: A = 51000(1 + 0.04/1)^(1*1) = 53040
- So, the interest for the second year is: 53040 - 51000 = 2040

Step 4: Calculate the total interest charged
- To calculate the total interest charged, we need to add the interest for both years.
- Total interest charged = 4080 + 2040 = 6120

Therefore, the total interest charged under instalment plan is 6120.
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A loan of 102000 is to be paid back in two equal annual instalments . if the rate of interest is 4% p.a, compounded annualy then the total interest charged under instalment plan is?
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A loan of 102000 is to be paid back in two equal annual instalments . if the rate of interest is 4% p.a, compounded annualy then the total interest charged under instalment plan is? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A loan of 102000 is to be paid back in two equal annual instalments . if the rate of interest is 4% p.a, compounded annualy then the total interest charged under instalment plan is? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A loan of 102000 is to be paid back in two equal annual instalments . if the rate of interest is 4% p.a, compounded annualy then the total interest charged under instalment plan is?.
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