A hire purchase company charges 5% Simple Interest (SI) per annum on goods sold under instalment scheme. An article priced Rs.12000 was hired with a down payment of Rs.3000. If the company allows only 12 monthly installments for repayment, find the monthly instalment amount to be paid.

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Rs 687.2

Rs 586.6

Rs 757.4

Rs 787.5

answer is D.

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Detailed Solution

Given, an article priced Rs 12000, down payment = Rs 3000 Money given as loan = 12000 – 3000
= 9000
Simple interest =

𝑃×𝑟×𝑡

100
Where P is the principal, r is the rate of interest and t is the time span.
Total interest = 900×5×1
100
= 450
Total amount to be paid = 9000 + 450 = 9450
Monthly installments = 9450
12
= 787.5
Therefore, the monthly instalment to be paid is Rs 787.5

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