Question

A loan of Rs. 2000 is to be paid back in three equal annual installments. How much is each installment approximately, if the interest is compounded annually at 12 % p.a.?

Answer 1

@shrutipande9

Answer 2

@nurali can definitely help u well

Answer 3

okay

Answer 4

@ganeshie8

Answer 5

are you ready for a short derivation ? :)

Answer 6

hmmmm.....

Answer 7

derivation is easy, but may be lets just memorize the EMI formula as you don't have much time for exam :

http://emicalculator.net/wp-content/uploads/2011/06/emiformula.png?fe8349

Answer 8

k

Answer 9

\[\large E =P.r . \dfrac{(1+r)^n}{(1+r)^n-1} \]

E =periodic payment
P = loan amount = 2000
r = periodic interest rate = 12% = 0.12
n = number of periods = 3

plug and chug

Answer 10

seen that formula before ?

Answer 11

26000

Answer 12

ugh, how can u pay 26,000 every year when for a loan of just 2000 ?

Answer 13

i might have but forgetten.i will always search for shortcuts

Answer 14

\[\large E =2000(0.12) \dfrac{(1+0.12)^3}{(1+.12)^3-1}\]

Answer 15

simplify ^^

Answer 16

oh! n=1 i used

Answer 17

I see... you're paying back in 3 annual installments, not 1

Answer 18

i got 840

Answer 19

im getting 832.7 :
http://www.wolframalpha.com/input/?i=2000%280.12%29*%5Cdfrac%7B%281%2B0.12%29%5E3%7D%7B%281%2B.12%29%5E3-1%7D

Answer 20

looks you're rounding the numbers too much

Answer 21

ya

Answer 22

832.7