First take Installment amount = P = Rs. 100
Total installments = 6 (One installment per year)
Simple and Easy rule -If there are ânâ installments, then, 1
st installment will have interest for (n-1) years, 2
nd will have interest for (n-2) years and so on.
So in this case, n=6
1
st installment will have interest for 5 years (n-1 = 6-1=5 years)
2
nd installment will have interest for 4 years (n-2 = 6-2=4 years)
3
rd installment will have interest for 3 years (n-3 = 6-3= 3 years)
4
th installment will have interest for 2 years (n-4 = 6-4= 2 years)
5
th installment will have interest for 1 year (n-5 = 6-5= 1 year)
6
th installment will have no interest (n-6 = 6-6= 0 years)
Total Amount = 6 Installments + Interest on those 6 Installments
Now here, rate of interest is same for all installments = R = 9%
P = Rs. 100 (same amount Rs. 100 for all installments)
From above rule we can calculate effective time period âTâ
T (for interest calculation) = 5 years + 4 years + years + 2 years + 1 year + 0 years
