Question

The cash price of a refrigerator is Rs 34 500. The hire purchase price is a deposit of Rs 6500 and 10 % simple interest on the outstanding balance, to be paid in 24 monthly installments. Calculate the amount of each monthly instalment

Answer 1

₹1400

Explanation:

You want to know the monthly installment when a refrigerator costing ₹34500 is paid for with ₹6500 down and 24 payments that include 10% simple interest.

Balance to be paid

The amount remaining after the ₹6500 down payment is ...

₹34500 -6500 = ₹28000

The amount to be repaid in installments will be this amount with 2 years' finance charge:

₹28000 × (1 +rt) = ₹28000 × (1 +0.10·2) = ₹28000×1.20

= ₹33600

Installments

When that is divided into 24 equal payments, each monthly installment is ...

₹33600/24 = ₹1400

Each monthly installment is ₹1400.