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Anil bought a motor cycle costing Rs.1,30,000 by making a down payment of Rs.30, 000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10% compounded annually?
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Anil bought a motor cycle costing Rs.1,30,000 by making a down payment...
Calculation of Equal Annual Payment for a Motor Cycle
Given:
Cost of motor cycle = Rs.1,30,000
Down payment = Rs.30,000
Number of years = 5
Interest rate = 10% per annum
Step 1: Calculate the amount to be financed
Amount to be financed = Cost of motor cycle - Down payment
Amount to be financed = Rs.1,30,000 - Rs.30,000
Amount to be financed = Rs.1,00,000
Step 2: Calculate the interest rate per payment period
Since the payments are made annually, the interest rate per payment period will be:
Interest rate per payment period = Annual interest rate / Number of payment periods per year
Interest rate per payment period = 10% / 1
Interest rate per payment period = 10%
Step 3: Calculate the number of payment periods
Since the payments are made annually for five years, the number of payment periods will be:
Number of payment periods = Number of years x Number of payment periods per year
Number of payment periods = 5 x 1
Number of payment periods = 5
Step 4: Calculate the equal annual payment using the formula:
Equal annual payment = Amount to be financed x (Interest rate per payment period / (1 - (1 + Interest rate per payment period)^-Number of payment periods))
Equal annual payment = Rs.1,00,000 x (0.10 / (1 - (1 + 0.10)^-5))
Equal annual payment = Rs.26,460.77 (rounded off to nearest paisa)
Therefore, each payment for the motor cycle would be Rs.26,460.77 if Anil agrees to make equal annual payments for five years at an interest rate of 10% compounded annually.
Given:
Cost of motor cycle = Rs.1,30,000
Down payment = Rs.30,000
Number of years = 5
Interest rate = 10% per annum
Step 1: Calculate the amount to be financed
Amount to be financed = Cost of motor cycle - Down payment
Amount to be financed = Rs.1,30,000 - Rs.30,000
Amount to be financed = Rs.1,00,000
Step 2: Calculate the interest rate per payment period
Since the payments are made annually, the interest rate per payment period will be:
Interest rate per payment period = Annual interest rate / Number of payment periods per year
Interest rate per payment period = 10% / 1
Interest rate per payment period = 10%
Step 3: Calculate the number of payment periods
Since the payments are made annually for five years, the number of payment periods will be:
Number of payment periods = Number of years x Number of payment periods per year
Number of payment periods = 5 x 1
Number of payment periods = 5
Step 4: Calculate the equal annual payment using the formula:
Equal annual payment = Amount to be financed x (Interest rate per payment period / (1 - (1 + Interest rate per payment period)^-Number of payment periods))
Equal annual payment = Rs.1,00,000 x (0.10 / (1 - (1 + 0.10)^-5))
Equal annual payment = Rs.26,460.77 (rounded off to nearest paisa)
Therefore, each payment for the motor cycle would be Rs.26,460.77 if Anil agrees to make equal annual payments for five years at an interest rate of 10% compounded annually.
Community Answer
Anil bought a motor cycle costing Rs.1,30,000 by making a down payment...
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Anil bought a motor cycle costing Rs.1,30,000 by making a down payment of Rs.30, 000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10% compounded annually?
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Anil bought a motor cycle costing Rs.1,30,000 by making a down payment of Rs.30, 000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10% compounded annually? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Anil bought a motor cycle costing Rs.1,30,000 by making a down payment of Rs.30, 000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10% compounded annually? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Anil bought a motor cycle costing Rs.1,30,000 by making a down payment of Rs.30, 000 and agreeing to make equal annual payment for five years. How much would be each payment if the interest on unpaid amount be 10% compounded annually?.
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