A car with a price of Rs.6,50,000 is bought by making some down payment. On the balance, a simple interest of 10% is charged in a lump sum and the money is to be paid in 20 equal annual installments of Rs.25,000. How much is the down payment?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. Rs.1,95,455.
The cost price of the car = Rs 650000
Let's assume the remaining amount after down payment = Rs x
total installments = 20 × 25000 = Rs 500000
According to the question,
500000 = x × 110/100
x = 454545.4
So, the down payment = 650000 - 454545.4 = 1,95,455