Y.RAJASEKHAR (ACCOUNTANT) (28 Points)
14 June 2017ABC Enterprises purchases a machinery for Rs.10,00,000/- by making a down payment of Rs.2,00,000/-
and remainder in equal instalments of Rs,1,00,000 foe eight years.What is the rate of interest to the firm.
Karan Batra
(Creator: TheProTalks)
(2325 Points)
Replied 21 June 2017
You didn’t mention the purchase price of the product now if you pay all the amount upfront. There's a concept in finance called EAI i.e. for Equated Annual Instalments, I’ll just give you an overview here and how you can apply whenever you want to calculate the Actual Interest rates whenever you acquire a product on instalments or whenever there is No interest EMI schemes in the market:
8lakhs= 2lakhs+1lakh*PVAf(Interest rate,8years)
6 =PVAf (r%,8 period
After looking into table you can find the actual interest rate applicable in your case.
Note: you can also add the processing fees on the RHS of the equation given above.
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