A man borrowed a certain sum of money and paid back in two equal installments. If the rate of compound interest is 4% and if he paid back Rs 1014 annually. What sum did he borrow?
Explanation:
Let P be the sum.
Total amount due at the end of 1st year = x1+4100 Installment for 1st year = 1014 Amount due after payment of installment = x1+4100 - 1014. ⇒ x2625 - 1014
Similarly, Amount due at the of 2nd year after payment of installment = x2625-10142625 - 1014 = 0
Solving the above equation, we get x = Rs. 1912.5
Hence, option (b).
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