A loan of ₹1,00,000 at 10% a year is repaid in 3 equal yearly instalments by the reducing-balance method. To the nearest rupee, what is each instalment? (Take $(1.1)^{3} = 1.331$.)

Explanation

1. 01

   $E = \frac{P\,i\,(1 + i)^{n}}{(1 + i)^{n} - 1} = \frac{1{,}00{,}000 \times 0.1 \times 1.331}{0.331}$.

2. 02

   $E = \frac{13{,}310}{0.331} \approx 40{,}211$ rupees.