Question

A bicycle is sold for Rs. $3,000$ cash or for Rs. $1,000$ cash down payment followed by two monthly installments of Rs. $1,024$ each. Compute the rate of interest charged under the installment scheme.

Answer 1

Principal amount $=$ Rs $(3,000-1,000)$
$=$ Rs. $2,000$
Interest $=2\times 1,024-2,000$
$=2,048-2,000=$ Rs. $48$
Let the rate of interest be $R\%$ p.a.
$\therefore$ Interest $=\frac{P\times R\times T}{100}$
$\Rightarrow 48=\frac{2,000\times R\times 2}{100\times 12}$

$\Rightarrow R=\frac{48\times 100\times 12}{2000\times 2}=14.4\%$