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Difficulty:
85%
(hard)
Question Stats:
54% (02:44) correct
46%
(02:29)
wrong
based on 126
sessions
History
Date
Time
Result
Not Attempted Yet
A man buys a scooter on making a cash down payment of $ 16224 and promises to pay two more yearly installments of equivalent amount in next two years. If the rate of interest is 4% per annum, compounded yearly, the cash value of the scooter, is:
A) $40000
B) $46824
C) $46000
D) $50000
Posted from my mobile device
A) $40000
B) $46824
C) $46000
D) $50000
Posted from my mobile device
Answer is B.
The man paid 16224 three times (inclusive of interest), means he paid 48672 in total. Therefore, cash value of the scooter will be lower than this amount.
Eliminate D.
Interest rate is 4%, also time period is only 2 years (compounding won't have a much effect). So, the cash value should be lesser than 48672 but close to it.
The man paid 16224 three times (inclusive of interest), means he paid 48672 in total. Therefore, cash value of the scooter will be lower than this amount.
Eliminate D.
Interest rate is 4%, also time period is only 2 years (compounding won't have a much effect). So, the cash value should be lesser than 48672 but close to it.
14ashish
except using options, is there any method/approach to solve this kind of problems ?
Posted from my mobile device
Mugdho
We have been asked for the actual price of the scooter without the interest
Price of scooter = Down Payment + Principal of the 1st yr inst. + Principal of the 2nd yr inst.
\(A=P(1+r)^t\)
\(P=\frac{A}{(1+r)^t}\)
Installment 1 (paid at the end of Year 1):
\(P1= \frac{16224}{(1+0.04)^1} \)
P1=15600
Installment 2 (paid at the end of Year 2):
\(P2=\frac{16224}{(1+0.04)^2}\)
P2=15000
Price of scooter = 16224+15600+15000
= 46824
Option B
this is how I did it : if the man paid three equal instalments then the total amount paid is 16227*3. This should be equal to the sum of the cash value(x) of the scooter and the interest.
16227*3=x+4/100x+4/100(x+4/100x). Solving this will return the value of x.
16227*3=x+4/100x+4/100(x+4/100x). Solving this will return the value of x.
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