Question

A television is available rs.7500 cash or rs.3000 cash down payment followed by five equal monthly nstalments of Rs. 1000 each. Find the rate of interest per annum charged under the instalment plan.

Answer 1

Buying the television of cash would cost Rs 7500.
Buying on hire purchase would cost :3000+(5*1000)=Rs8000
You realize that that the hire purchase price is higher by Rs 500
The percentage interest is therefore 
500/7500*100%=6.67%
Thus rate=6.67%

Answer 2

Answer:

Annual Rate under the installment plan = 16%

Step-by-step explanation:

Cost Price of television = Rs. 7500

Cash which is to be paid at time of purchase = Rs. 3000

Installment to be paid each month = Rs. 1000

Cost Price of television Under installment plan = 3000 + 5 × 1000

                                                                                  = Rs. 8000

Interest Paid by the customer = 8000 - 7500

                                                    = Rs. 500

Time = 5 months

⇒ Time = 0.42 years (  1 year = 12 months )

Principal = Rs. 7500

Simple Interest = Principal × Rate × Time

⇒ 500 = 7500 × Rate × 0.42

⇒ 500 = Rate × 3125

⇒ Rate = 0.16

⇒ Rate = 0.16 × 100 = 16% per annum