Multiple choice

A tractor is sold for Rs. 4,50,000 or Rs. 1,50,000 cash down together with ten equal monthly instalments of Rs. 32,000 each. Find the rate of interest charged under the investment plan.

  1. 3.38%

  2. 3.44%

  3. 4.38%

  4. 4.44%

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The cash price is 450,000. The installment plan is 150,000 down plus 10 payments of 32,000, totaling 470,000. The interest is 20,000 on the declining balance, which calculates to approximately 4.44% using the standard annuity formula for monthly installments.