Instalment Buying — Important Questions

₹1,500

Step 1: Calculate total amount paid under instalment plan: Cash down payment + Total instalments = ₹20,000 + (3 × ₹10,500) = ₹20,000 + ₹31,500 = ₹51,500. Step 2: Compare with cash price: Cash price = ₹50,000. Step 3: Find the extra amount: Extra amount = Total instalment payment - Cash price = ₹51,500 - ₹50,000 = ₹1,500. Step 4: This ₹1,500 represents the interest charged for the convenience of paying in instalments.

25%

Step 1: Identify the given values: Cash price = ₹8,000, Down payment = ₹2,000. Step 2: Use the percentage formula: Percentage = (Down payment ÷ Cash price) × 100. Step 3: Calculate: Percentage = (₹2,000 ÷ ₹8,000) × 100 = (1/4) × 100 = 25%. Step 4: This means the customer pays 25% of the total cash price upfront and the remaining 75% through instalments with interest.

₹5,000

Step 1: Understand that without interest, instalments would be equal divisions of the balance. Step 2: Given: Balance after down payment = ₹15,000, Number of instalments = 3. Step 3: Calculate each instalment: Amount per instalment = Balance ÷ Number of instalments = ₹15,000 ÷ 3 = ₹5,000. Step 4: Note that in actual instalment plans, interest is added to this base amount, making the actual instalments higher than ₹5,000.

200

Step 1: Calculate total amount paid under instalment plan: Down payment + Total instalments = ₹800 + 2(₹1,200) = ₹800 + ₹2,400 = ₹3,200. Step 2: Given cash price = ₹3,000. Step 3: Calculate interest paid: Interest = Total amount paid - Cash price = ₹3,200 - ₹3,000 = ₹200. Step 4: This ₹200 is the extra cost for choosing the instalment option over cash payment. Step 5: The interest represents the cost of financing the purchase over time instead of paying the full amount upfront.