Question

The cost of a cell phone is Rs. 8,000 and the down payment is Rs. 1,000. The balance amount is to be paid in 8 equal installments of Rs. 1,000 each. Find the rate of interest.

Answer 1

Data: Cost price = Rs. 8,000, down payment = Rs. 1,000.
Balance P = 8000 - 1000 = Rs. 7,000. Number of installments n = 8.
Installment amount = Rs. 1,000. Thus
excess amount paid = E = nI - P $=(8\times 1000)-7000=Rs.100)$
Therefore
$R=\frac{2400E}{n\left(\right(n+1)I-2E)}$
$=\frac{2400\times 1000}{8\left(\right(8+1)\times 1000-2\times 1000)}$
$=\frac{2400\times 1000}{8(9000-2000)}$
$=\frac{2400\times 1000}{8\times 7000}=\frac{300}{7}\approx \mathrm{42.9.}$
Hence R = 42.9% approximately.