Question

A dinner set is sold for Rs. $1,500$ cash or Rs. $1,000$ cash down payment and Rs. $545$ to be paid in one installment after $6$ months. Find the rate of interest charged under installment scheme.

Answer 1

Cash price of a dinner set $=$ Rs. $1500$.
Cash down payment of a dinner set $=$ Rs. $1000$.
Balance payment $=$ Rs. $(1500-1000)$ $=$ Rs. $500$
One installment to be paid after six months $=$ Rs. $545$
Interest $\left(I\right)$ to be charged $=$ Rs. $(545-500)$ $=$ Rs. $45$
Time period $\left(T\right)=6$ months $=\frac{6}{12}$ years.
Let the rate of interest be $R\%$ p.a.
$\Rightarrow I=\frac{P\times R\times T}{100}$

$\Rightarrow R=\frac{100\times I}{P\times T}$

$\Rightarrow R=\frac{100\times 45}{500\times 6/12}$

$\Rightarrow R=18$
Hence, the rate of interest charged under the installment scheme is $18\%$ p.a.