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A loan of ₹ 1,02,000 is to be paid back in two equal annual instalments. If the rate of interest is 4% p.a., compounded annually, then the total interest
charged (in₹) under this instalment plan is.'
?
charged (in₹) under this instalment plan is.'
?
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A loan of ₹ 1,02,000 is to be paid back in two equal annual instalment...
Calculation of Total Interest Charged on Loan Repayment
Given, loan amount (P) = ₹ 1,02,000
Rate of interest (r) = 4% p.a.
Number of instalments (n) = 2
Instalment amount = Total repayment amount / Number of instalments = ₹ 1,02,000 / 2 = ₹ 51,000
Calculation of Interest for the First Year
Interest for the first year = P * (1 + r/100)^n - P
= 51,000 * (1 + 4/100)^1 - 51,000
= ₹ 2,040
Calculation of Interest for the Second Year
For the second year, the loan amount outstanding at the beginning of the year is the instalment amount minus the principal repaid in the first year.
Outstanding loan amount at the beginning of the second year = ₹ 51,000 - (51,000 / (1 + 4/100)^1)
= ₹ 49,039.22
Interest for the second year = outstanding loan amount * r/100
= 49,039.22 * 4/100
= ₹ 1,961.57
Total Interest Charged
Total interest charged = Interest for the first year + Interest for the second year
= ₹ 2,040 + ₹ 1,961.57
= ₹ 4,001.57
Therefore, the total interest charged under this instalment plan is ₹ 4,001.57.
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A loan of ₹ 1,02,000 is to be paid back in two equal annual instalments. If the rate of interest is 4% p.a., compounded annually, then the total interestcharged (in₹) under this instalment plan is.'?
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