in a deal of tv with selling price of 50000, a customer can purchase it for cash down payment of 10000.
and balance in 12 monthly installments of 3800
calculate flat rate and effective rate..
soln..( as per me)
selling price 50000
cash down payment 10000
balance in 12 monthly installments of 3800
Amt = 12* 380 = 45600
i.e interst 5600
flat rate 5600/40000 = 14%( this soln is correct)
interest comes to approx 1.17% p.m.
(50000-10000)/12= 3333 p.m.
3800-3333= 467(Interest)
467/40000*100= 1.16%
3800 * 12 = 45600
interest 45600-40000 = 5600
im not getting the effective int rate...
interest rate per annum is coming to 14%(5600/40000*100). so mnthly int is coming to 1.17% as calculated by above.
What is the problem that you are facing in calculating the effective int rate.
the question is from RTP MAY 2013 Q5
the effective interest rate is Coming 25.85%
samajh nahi aa raha kaise...
thanku sir for ur responses...
it is 25.85%
I tried hit and trial method
40000/12 = 3333.333
I calculated interest for evey month like for first month i used 12 month interest
for next payment i used 11 month interest
so on
total interest must be 5600 i.e. 45600-40000
so 25.85% came
thanku CA PRASHANT GUPTA & GIRIDHAR
thanku
just went in a wrong direction to solve..
thanku sir for d reply..
Hi
You can check excel file for how to calculate.. Ans may vary case to case.
Thanks!!
CAclubindia
