Question:
Rajni buys a car for Rs.350000. She pays Rs.110000 in cash and the balance to be paid in 12 monthly installments of Rs.20000 each. If rate of interest is 5/4% per month and she has to pay the interest on the unpaid balance every month with installment due, find the total cost of the car
Answer:
Given total amount paid= 110000
and amount due= 350000-110000=240000
Now amount of first installment= 20000+interest on unpaid amount 240000
= 20000+{(5*240000*1)/(4*100)}
= 20000 + (5*2400)/4
= 20000 + 5*600
= 20000 + 3000
= 23000
Amount for second installement = 20000+{(5*220000*1)/(4*100)}
= 20000 + (5*2200)/4
= 20000 + 5*550
= 20000 + 2750
= 22750
Now coomon difference d = 22750 - 23000
=> d = -250
We have a= 23000
and n=12
Now put all values in formula
Sn = (n/2)[2a+(n-1)d]
= (12/2)*[2*23000 + (12-1)*(-250)]
= 6*[46000 + 11*(-250)]
= 6*[46000 - 2750]
= 6* 43250
= 259500
Amount due= 240000
So total amount paid= 259500+240000=499500.
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