A cell-phone is available for Rs. 2500 cash or Rs. 520 cash down payments followed by 4 equal monthly installments. If the rate of interest charged is 25% per annum, calculate the monthly installment.
A. 520
B. 480
C. 550
D. none of these
Solution (By Examveda Team)
Cost Price of phone = Rs. 2500
Down Payment = Rs. 520
Loan Taken(P)= 2500 - 520 = Rs. 1980.
No. of installments (n)= 4
Rate (R)= 25% per annum = 25/12 = 2.08 per month.
Installments Amount = P *R (1+R)^n / ((1+R)^n - 1)
Installments Amount = 1980 * 2.08 * (1 + 2.08)^4 / ((1+ 2.08)^4 -1)
Installments Amount = 1980 * 2.08 *90 / (90 -1) = Rs. 4164.
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nearly 530 per month....if they calculate intrest on 1980 ..............nearly 550 if they calculate intrest on 2500............some one plz confirm which is correct