Question

A watch is sold for rs 960 cash or for rs. 480 cash down payment and two monthly installments of rs 245 each. Find the rate of interest charged under the installment plan.

Answer 1

we can use the simple interest formula for this

Answer 2

ANSWER

Let r% p.a. be the rate under installment scheme. After Rs 600 cash is paid, Rs 1200 remained to be paid.

This becomes Rs 1,220. Total interest paid is Rs 20.

Now Rs 1,200 is kept for one month and Rs 600 is kept for one month.

⇒ Rs 600 is kept for 3 months at r% and interest paid is Rs 20.

$\therefore 20 = 600 \times \frac{3}{12} \times \frac{r}{100}$

$= > r = \frac{40}{3} = 13.33\%$