Question

A scooty is sold by an automobile agency for rs. 19200 cash or for rs. 4800 cash down payment together with five equal monthly instalments. If the rate of interest charged by the company is 12% per annum find each instalment. (a) rs. 2534.60 (b) rs. 2964.70 (c) rs. 2436.50 (d) rs. 2322.30

Answer 1

The correct option is (b) rs. 2964.70

Explanation:

Given,

Cash Price = 19200

Cash down Payemnt = 4800

Number of Installments = 5

Rate of Interest = 12

Remaining Balance = 19200-4800=14400

Let us suppose Installment = X

Thus, Interest Paid = 5X-14400 ===>(1)

Principal for 1st month = 14400

Principal for 2nd month = 14400-1X

Principal for 3rd month = 14400-2X

Principal for 4th month = 14400-3X

Principal for 5th month = 14400-4X

Total =72000-10X

Interest = $\frac{(72000 - 10X) \times 12 \times 1}{100 \times 12}$ =======>(2)

from eq. 1 and 2

$\frac{(72000 - 10X) \times 12 \times 1}{100 \times 12}$ =  $5X-14400$

$(72000-10X)=500X-1440000$

$500X+10X=72000+1440000$

$510X = 1512000$

$X= \frac{50400}{17}$

X = 2964.70

Thus, Installment Amount is 2964.70