CAT 2018 Slot 1 QA Question 24: John borrowed Rs. 2,10,000 from a bank at an interest rate of 10% per annum, compounded annually. The loan was repaid in two equal instalments, the first after one year and the second after another ye

Question

John borrowed Rs. 2,10,000 from a bank at an interest rate of 10% per annum, compounded annually. The loan was repaid in two equal instalments, the first after one year and the second after another ye

Accepted Answer

Let each instalment be Rs. E.
After one year, the amount due is
$210000 	imes 1.1 = 231000$
After paying the first instalment, the remaining amount is $231000 - E$.
This remaining amount earns 10% interest for the next year and equals the second instalment.
$1.1(231000 - E) = E$
$254100 - 1.1E = E$