A cellphone is available for Rs 600 or for Rs 300 cash down payment together with Rs 360 to be paid after two months. Find the rate of interest charged under the scheme.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 120%
Total payment = ₹300 + ₹360 = ₹660
Extra amount paid = Total payment on installment - Cash price = ₹660 - ₹600 = ₹60
Principal (P) = ₹600 - ₹300 = ₹300
Interest (SI) = ₹60
Time (T) = 2 months = 1/6 years
Let the rate of interest per annum = R
Now, SI = (P × R × T)/100
⇒ 60 = (300 × R × 1/6)/100
⇒ 60 = R/2
⇒ R = 120
Therefore, the rate of interest charged under the scheme is 120%.