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A sum of Rs 210 was taken as a loan. This is to be paid back in two equal installments. If the rate of interest be 10% compounded annually, then the value of each installment is = ?

a) Rs. 127
b) Rs. 121
c) Rs. 210
d) Rs. 225

Answer: b
Explanation:
$$\eqalign{ & {\text{Rate of interest}} \Rightarrow {\text{ 10% = }}\frac{1}{{10}} \cr & {\text{Each installment of 2 years}} \cr & \frac{{10}}{{11}} \times \frac{{\left( {10 + 11} \right)}}{{11}} \times {\text{ Installment = P}}{\text{.A}} \cr & \frac{{10}}{{11}} \times \frac{{\left( {10 + 11} \right)}}{{11}} \times {\text{ Installment = 210}} \cr & {\text{Installment = 121}} \cr} $$

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