Question
Arjun acquired a smartphone with a price tag of Rs.
18,000. For the initial payment, he paid Rs. 2,160. The remainder was to be paid in two equal installments, but with a twist. The installments were subject to compound interest at a rate of 20% per annum, compounded annually. Calculate the value of each installment.Solution
ATQ, Amount due after down payment = 18000 – 2160 = Rs. 15,840 Let the amount of each instalment be Rs. ‘a’ Amount to be paid at the end of 1st year = 1.2 × 15840 = Rs. 19,008 According to the question, 1.2 × (19008 – a) = a Or, 1.2 × 19008 – 1.2a = a Or, 2.2a = 1.2 × 19008 Or, a = {(1.2 × 19008)/2.2} = 10368 Therefore, each installment = Rs.10,368
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