A cycle costs Rs.1500. If Rs. 350 was paid as cash payment and rest amount was to be paid in 3 monthly installments of Rs.400. Find the rate of interest p.a.
Answer & explanation
Correct answer: option 2
Given:
Price of Bicycle = 1500
Down Payment = 350
Payment in 3 installments = 3 × 400 = 1200
SI = \(\frac{PRT}{100}\)
Total amount = 1200 + 350 = 1550
⇒ Interest Paid = 1550 – 1500 = 50
Principal for the first month = 1500 – 350 = 1150
Principal for the second month = 1150 – (350 + 50) = 750
Principal for the third month = 750 – (350 + 50) = 350
∴ Total Principal = 1150 + 750 + 350 = 2250
Rate of interest will be the same throughout 3 years
Time = \(\frac{1}{12}\) years
S.I = (2250 × (1/12) × R)/100 = 50
∴ R = \(\frac{80}{3}\) % = 26.66%