Help. calculation of effective rate

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)

m having problem in calculation of Effective rate of interest..

 

Replies (8)

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

 

thankusmiley

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!!

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