A chair is sold for cash price of Rs. 450 on a cash down payment of Rs. 210 and two equal monthly installment of Rs.
125 each. Find out the rate of interest charged in the scheme.
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Step-by-step explanation:
Cash price of a dinner set = Rs. 1500.
Cash down payment of a dinner set = Rs. 1000.
Balance payment = Rs. (1500−1000) = Rs. 500
One installment to be paid after six months = Rs. 545
Interest (I) to be charged = Rs. (545−500) = Rs. 45
Time period (T)=6 months =
12
6
years.
Let the rate of interest be R% p.a.
⇒I=
100
P×R×T
⇒R=
P×T
100×I
⇒R=
500×6/12
100×45
⇒R=18
Hence, the rate of interest charged under the installment scheme is 18% p.a.
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