Multiple choice

An electric iron is sold for Rs. 440 cash or for Rs. 200 cash down payment together with Rs. 244 to be paid after one month. Find the rate of interest charged is the instalment scheme.

  1. 15%

  2. 20%

  3. 16.66%

  4. 25%

  5. 22.5%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash price = Rs. 440. Installment total = Rs. 200 + Rs. 244 = Rs. 444. Extra amount (interest) = Rs. 4. This interest is charged on the amount not paid upfront = Rs. 440 - Rs. 200 = Rs. 240 for 1 month. Monthly rate = 4/240 = 1/60 ≈ 1.67%. Annual rate = 1.67% × 12 = 20%.

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