A sum of money is borrowed and paid back in two annual installments of Rs.500 each allowing 10% compound interest. The sum borrowed was (approximately)

Solution: Present worth of  Rs x due T years $=\frac{x}{{(1+\frac{R}{100})}^T}$

Principal = Present worth of  Rs.500 due 1 year +

 Present worth of  Rs.500 due to 2 years

$\begin{array}{l}=\frac{500}{{(1+\frac{10}{100})}^1}+\frac{500}{{(1+\frac{10}{100})}^2}\\ =454.54+413.22\\ =868\end{array}$