A farmer buys a used tractor for ₹ 12000. He pays ₹ 6000 cash and agrees to pay the balance in annual instalments of ₹ 500 plus 12% interest on the unpaid amount. How much the tractor cost him?
Given: Price of the tractor is Rs. 12000. He pays ₹ 6000 cash and agrees to pay the balance in annual instalments of ₹ 500 plus 12% interest on the unpaid amount.
To find: Total cost of the tractor if he buys it at installment
Total price = 12000
Paid amount = 6000
Unpaid amount = 12000 – 6000 = 6000
He pays remaining 6000 in n number of installments of 500 each
Cost incurred by him to pay remaining 6000,
Formula used:
where a is first term, d is common difference and n is number of terms in an A.P.
Therefore,
= 10680
Total cost = 6000 + 10680 = 16680
Hence, total cost of the tractor if he buys it at installment is Rs. 16680