Question

A machine was sold on hire-purchase system on $1^{st}$ March, $2015$ Rs. $9000$ was paid at spot and rest was paid by four equal quarterly installments of $11000$ each. The cash price of machine was Rs. $90000$. Find out the amount of interest included in each installment.

Answer 1

Hire-purchase Price $=9000+(11000\times 4)=$ Rs. $53000$

Less: Cash Price Rs. $90,000$

Total Interest $=$ Rs. $37000$
The total Interest of Rs. $32000$ is to be apportioned among the various installments i.e. $4^{th},3^{rd},2^{nd}$ and 1st installment in the ratio of $1:2:3:4$ (i.e. among $1^{st},2^{nd},3^{rd}$ and $4^{th}$ installment in the ratio of $4:3:2:1$)
Share of $1^{st}$ installment in the Interest $=$ $\frac{32000\times 4}{10}$= Rs. $12800$
Share of $2^{nd}$ installment in the Interest $=$ $\frac{32000\times 3}{10}$= Rs. $9600$
Share of $3^{rd}$ installment in the interest $=$ $\frac{32000\times 2}{10}$= Rs. $6400$
Share of $2^{nd}$ installment in the interest $=$ $\frac{32000\times 1}{10}$= Rs. $3200$