18) A firm purchases a machinery for Rs.800000 by making a down payment of
Rs.150000 and the remainder in equal annual installments of Rs.150000 for 6 years. How
much is the rate of interest that the firm is paying?
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14
Answer:
The rate of interest that the firm is paying is 38.46%
Step-by-step explanation:
Cost of machinery = 8,00,000 Rs.
Down payment given by the firm = 1,50,000 Rs.
Finance borrowed = 8,00,000 - 1,50,000 = 6,50,000 Rs.
In 6 years the amount paid = 1,50,000 × 6 = 9,00,000 Rs.
Total interest paid in 6 years = 9,00,000 - 6,50,000
= 2,50,000 Rs.
Rate of interest paid by the firm
= (Total Interest/ Total Loan) × 100
= (2,50,000/6,50,000) × 100
= 38.46%
Therefore, the rate of interest that the firm is paying is 38.46%
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