Question

An almirah is sold for Rs 1,800 cash or Rs 600 cash down payment followed by two monthly installments of Rs 610 each. The rate of interest charged under the instalment scheme is

• A. 14% p.a.
• B. 13.41% p.a.
• C. 15% p.a.
• D. 16.72% p.a.

Answer 1

The correct option is B 13.41% p.a.

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.
$\Rightarrow$ Rs 600 is kept for 3 months at r% and interest paid is Rs 20.
$\therefore 20=600\times \frac{3}{12}\times \frac{r}{100}$
$\Rightarrow r=\frac{40}{3}=13.33$%.