rajatr wrote:
In case of CI ,Repayment in equal installments (X) can be given as:
X =P*r/ [1-(100/100+r)^n]where X :each installment
r: rate
n: number of installments
P: Principal amount borrowed by borrower.
So in this case it would be 1000*10/[1-(10/11)^3] = 133100/331 = 402
Actual formula is - \(E = \frac{P *r * ( 1 + r )^n }{ ( ( 1 + r )^n - 1 )}\)
where X :each installment
r: r is monthly rate of interest . \(r =\frac{ r}{12 *100}\)
n: number of installments
P: Principal amount borrowed by borrower.
If we modify this formula - we will get \(X = \frac{P *r }{ ( 1 - (1 / ( 1 + r ))^n)}\)
But note that r - monthly rste of interest not a value. So, put r = r/100 in above equation to get the final formula.
\(X = \frac{P *r }{ 100 * ( 1 - (100 / ( 100 + r ))^n )}\)
\(X = \frac{1000 *10 }{ 100 * ( 1 - (100 / ( 100 + 10 ))^3 )}\)
\(X = \frac{1000 *10 }{ 100 * ( 1 - (10/11)^3 )}\)
\(X = \frac{1000 *10 }{ 100 * ( 1331 - 1000 )/1331 }\)
\(X = \frac{100 * 1331 }{ 331 }\) ~ 400 .
Ans C