The cash price of a car is $25000. A customer paid deposits $ 3750. He repaid the amount owing in 24 equal monthly installments. If he was charged simple interest at the rate of 40% p.a, how much was each installment.
25000 – 3750
= 21250
21250 × 0.4 × 24/12
=38250
Installment = 38250/24
= 1,593.75
To find out how much each installment is, you need to follow these steps:
Step 1: Subtract the deposit amount from the cash price of the car to find the amount owing.
Cash Price of the car - Deposit amount = Amount owing
$25,000 - $3,750 = $21,250
Step 2: Calculate the total amount to be repaid, including interest.
Amount owing × Interest rate × Repayment period = Total amount to be repaid
$21,250 × 0.4 × (24/12) = $38,250
Step 3: Divide the total amount to be repaid by the number of installment payments.
Total amount to be repaid ÷ Number of installments = Installment amount
$38,250 ÷ 24 = $1,593.75
Therefore, the monthly installment for the car is $1,593.75.