Damani purchased an item costing ₹7,500 and paid ₹3,500 as a down payment for the same. If the simple interest charged for the remaining amount is 9% per annum and Damani cleared all dues after 4 months of the purchase, how much did Damani pay after 4 months as interest?
Answer & explanation
Correct answer: option 1
Total Principle (P) = 7500
Down payment = 3500
Remaining amount = 7500 - 3500 = 4000
So, amount on which Interest (I) is paid is Rs 4000
Rate = 9%
Time = 4 months or \(\frac{4}{12}\) Year
Simple Interest = \(\frac{P\;×\;R\;×\;T}{100}\)
S.I. = \(\frac{4000\;×\;9\;×\;4}{100\;×\;12}\) = Rs 120