Question

x. purchased
machinery under
under hire purchase
from y.
The cash price if the
Rs: 15,500. The payment was
made as follows
signing the agreement - Rs. 3,000
I yr
end
RS: 5.000
Rs. 5,0OD.
be
10
on
II year end
D
Rs. 5,000
year end
the interest
Calculate
each year,

pls solve this in a paper and send pls I need this fast​

Answer 1

CORRECT QUESTION :

• ❖ X purchased machinery under hire purchase agreement from Y. The cash price of the machinery was Rs. 15,500. The payment was to be made as follows : On signing the agreement Rs. 3,000; First year end Rs. 5,000; Second year end Rs. 5,000 and Third year end Rs. 5,000. Calculate interest for each year.

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ANSWER :

• ✎ Interest charged for the 1st year is Rs. 1,250.

• ✎ Interest charged for the 2nd year is Rs. 833.

• ✎ Interest charged for the 3rd year is Rs. 417.

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SOLUTION :

❒ Given :-

• Cash Price of the machinery = Rs. 15,500

• Amount paid on signing the agreement = Rs. 3,000

• Amount paid at the end of 1st year, i.e., in 1st inśtalment = Rs. 5,000

• Amount paid at the end of 2nd year, i.e., in 2nd inśtalment = Rs. 5,000

• Amount paid at the end of 3rd year, i.e., in 3rd inśtalment = Rs. 5,000

❒ To Calculate :-

• Interest charged on the machinery for each year = ?

❒ Note :-

• ➣ Where an asset is purchased under Hire Purchases System and only the cash price, amount paid on signing the agreement and the amount paid on each inśtalment are given but the rate of interest is not given and equal amount is paid on each inśtalment; then the total amount of interest is to be apportioned among the various inśtalments.

• ➣ For example : When there is five equal inśtalments; then the total interest will be apportioned among the inśtalments as 5th, 4th, 3rd, 2nd and 1st inśtalment in the ratio of 1 : 2 : 3 : 4 : 5 (i.e. among 1st, 2nd, 3rd, 4th and 5th inśtalment in the ratio of 5 : 4 : 3 : 2 : 1)

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❒ Calculation :-

Here,

• Cash Price = Rs. 15,500

• Down Payment = Rs. 3,000

• 1st Inśtalment = Rs. 5,000

• 2nd Inśtalment = Rs. 5,000

• 3rd Inśtalment = Rs. 5,000

∴ Hire Purchase Price = Down Payment + 1st Inśtalment + 2nd Inśtalment + 3rd Inśtalment

➜ Hire Purchase Price = Rs. 3,000 + Rs. 5,000 + Rs. 5,000 + Rs. 5,000

➜ Hire Purchase Price = Rs. 18,000

Hence,

• ★ Total Interest Charged = Hire Purchase Price - Cash Price

➜ Total Interest Charged = Rs. 18,000 - Rs. 15,500

∴ Total Interest Charged = Rs. 2,500

Now,

➲ The total interest of Rs. 2,500 is to be apportioned among the various inśtalments i.e. 3rd, 2nd and 1st inśtalment in the ratio of 1 : 2 : 3 (i.e. among 1st, 2nd and 3rd inśtalment in the ratio of 3 : 2 : 1)

• ∴ Interest charged for the 1st year = Rs. ( 2,500 × $\sf{\dfrac{3}{6}}$ )

➨ Interest charged for the 1st year = Rs. 1,250

• ∴ Interest charged for the 2nd year = Rs. ( 2,500 × $\sf{\dfrac{2}{6}}$ )

➨ Interest charged the 2nd year = Rs. 833

• ∴ Interest charged for the 3rd year = Rs. ( 2,500 × $\sf{\dfrac{1}{6}}$ )

➨ Interest charged for the 3rd year = Rs. 417