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If a machine is purchased for Rs. 5,00,000 on 1st April, 2002 on hire-purchase basis. What is the average due date, if amount is repaid in 5 yearly annual instalments starting from 1thApril, 2003
- a)1.4.05
- b)1.4.07
- c)1.4.03
- d)none
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
If a machine is purchased for Rs. 5,00,000 on 1stApril, 2002 on hire-p...
Average in the sense 1.4.03-1.4.07
and 1.4.05 is the average of that.
and 1.4.05 is the average of that.
If u give 1.4.03 as and so on 1.4.07
as (1+2+3+4+5)/5 = 3
and 3 years is 1.4.05
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If a machine is purchased for Rs. 5,00,000 on 1stApril, 2002 on hire-p...
Given:
Purchase date of the machine = 1st April, 2002
Purchase cost of the machine = Rs. 5,00,000
Repayment start date = 1st April, 2003
Total repayment period = 5 years
To find:
Average due date
Solution:
Step 1: Calculation of the total interest
As the machine is purchased on hire-purchase basis, the total interest charged on the machine is given by:
Total interest = (Total payments × Interest rate × Repayment period) – Purchase cost
Here,
Purchase cost = Rs. 5,00,000
Repayment period = 5 years
Let's assume the interest rate is 'r'.
Total payments = 5 annual instalments
Therefore,
Total interest = (5 × r × 5) – 5,00,000
Step 2: Calculation of the interest rate
The interest rate can be calculated using the following formula:
Interest rate = (Total interest + Purchase cost) / (Total payments × Repayment period)
Substituting the values, we get:
r = [(Total interest + Purchase cost) / (Total payments × Repayment period)] / 100
r = [(Total interest + 5,00,000) / (5 × 5)] / 100
r = (Total interest + 5,00,000) / 25,000
Step 3: Calculation of the average due date
The average due date is the mid-point between the purchase date and the last instalment due date.
As the repayment period is 5 years, the last instalment due date will be 1st April, 2008.
Therefore,
Average due date = Purchase date + (Repayment period / 2)
Average due date = 1st April, 2002 + (5 / 2) years
Average due date = 1st April, 2004.5
Converting the decimal to date format:
0.5 years = 6 months
Therefore,
Average due date = 1st October, 2004
Hence, the correct answer is option (A) 1.4.05.
Purchase date of the machine = 1st April, 2002
Purchase cost of the machine = Rs. 5,00,000
Repayment start date = 1st April, 2003
Total repayment period = 5 years
To find:
Average due date
Solution:
Step 1: Calculation of the total interest
As the machine is purchased on hire-purchase basis, the total interest charged on the machine is given by:
Total interest = (Total payments × Interest rate × Repayment period) – Purchase cost
Here,
Purchase cost = Rs. 5,00,000
Repayment period = 5 years
Let's assume the interest rate is 'r'.
Total payments = 5 annual instalments
Therefore,
Total interest = (5 × r × 5) – 5,00,000
Step 2: Calculation of the interest rate
The interest rate can be calculated using the following formula:
Interest rate = (Total interest + Purchase cost) / (Total payments × Repayment period)
Substituting the values, we get:
r = [(Total interest + Purchase cost) / (Total payments × Repayment period)] / 100
r = [(Total interest + 5,00,000) / (5 × 5)] / 100
r = (Total interest + 5,00,000) / 25,000
Step 3: Calculation of the average due date
The average due date is the mid-point between the purchase date and the last instalment due date.
As the repayment period is 5 years, the last instalment due date will be 1st April, 2008.
Therefore,
Average due date = Purchase date + (Repayment period / 2)
Average due date = 1st April, 2002 + (5 / 2) years
Average due date = 1st April, 2004.5
Converting the decimal to date format:
0.5 years = 6 months
Therefore,
Average due date = 1st October, 2004
Hence, the correct answer is option (A) 1.4.05.
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If a machine is purchased for Rs. 5,00,000 on 1stApril, 2002 on hire-purchase basis. What is the average due date, if amount is repaid in 5 yearly annual instalments starting from 1thApril, 2003a)1.4.05b)1.4.07c)1.4.03d)noneCorrect answer is option 'A'. Can you explain this answer?
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