'X' borrows money at CI and pays 4800 at the end of the 1st yr and 6820 at the end of the 2nd yr. If the RoI is 10% pa, find the sum borrowed.
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X pays 4800 at the end of the first year and 6820 at the end of the second year.
At a compound rate of interest of 10% per annum:
The 4800 paid at the end of the first year is equivalent to an initial amount borrowed of 4800/1.1 = 4363.63
The 6820 paid at the end of the second year is equivalent to an initial amount borrowed of 6820/(1.1)^2 = 5636.36
The total amount borrowed is 4363.63 + 5636.36 = 10,000
The sum borrowed initially is 10,000.
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