A man purchased a car for ₹12 lakhs and was insured for 80% of the cost. He sold the car at a 15% loss, but had not yet delivered it to the buyer when he met with an accident. After the accident, the car was damaged a lot and the insurance company paid 90% of the insured amount. The net difference in the two transactions is:
Answer & explanation
Correct answer: option 1
We know that,
a% of a number = Actual number × (a/100)
We have,
A man purchased a car for price = Rs. 12 lakh
Car was insured at = 80% of the cost of the car
Car was sold at the loss of = 15%
The percentage of the insured amount paid by the insurance company = 90%
According to the question,
SP = 12,00,000 × (\(\frac{85}{100}\) ) = 10,20,000
Amount paid by the insurance company = 12,00,000 × (\(\frac{80}{100}\) ) × (\(\frac{90}{100}\) ) = 864000
Required difference = 10,20,000 - 8,64,000 = 1,56,000 or 1.56 lakhs