Under the Rural Housing Scheme, the Delhi Development Authority (DDA) allotted a house to Kamal Raj for Rs. 126100. This payment is to be made in three equal annual instalments. If the money is reckoned at 5% per annum compound interest, then how much is to be paid by Kamal Raj in each instalment?

Explanation;

Let the amount of each instament be Rs.x

Present value = 100 (1+5\100)^3

= 100×21\20×21\20×21\20=Rs.9261\80

Present value of Rs 9261\80 due after 3yr = Rs. 100

Present value of Rs. x due after 3 yr

= 100×80\9261×x = Rs.8000x\9261

Amount of Rs.100 for 2yr

= 100 (1+5\100)^2

= 100 21\20×21\20=441\4

Present value Rs. x due after 2 yr

= Rs.400\441x

Similarly, present value of Rs.x due after 1 yr

= Rs.20\21x

∴ 8000\9261x+400\441x+20\21x = 126100

=> 8000x +8400x + 8820x

= 126100 ×9261

=> x = 126100×9261\25220 = Rs.46305