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

Are you sure it was 40% interest rate? I believe that is illegal.

it was 4%

No. Rework the problem, making sure that you state the interest rate as 0.04

21250 + 21250 * 0.04 * 24/12

=22950
22950/24
= 956.25

Yes. The monthly installment is $956.25

To calculate the installment amount, we need to use the formula for calculating the total amount paid with simple interest:

Total Amount = Principal Amount + Interest

In this case, the Principal Amount is the remaining balance after the deposit, which is:

Principal Amount = Cash Price - Deposit Amount

Principal Amount = $25,000 - $3,750

Principal Amount = $21,250

Next, we calculate the Interest:

Interest = Principal Amount × Interest Rate × Time

Here, the Interest Rate is given as 40% per year, and the Time is 24 months.

Interest = $21,250 × 0.4 × (24/12)

Interest = $21,250 × 0.4 × 2

Interest = $17,000

Now, we can calculate the Total Amount:

Total Amount = Principal Amount + Interest

Total Amount = $21,250 + $17,000

Total Amount = $38,250

Finally, to find the installment amount, we divide the Total Amount by the number of installments:

Installment Amount = Total Amount / Number of Installments

Installment Amount = $38,250 / 24

Installment Amount = $1,593.75

So, each monthly installment amount is $1,593.75.