EXAMPLE A bicycle is available for Ks. 1500 cash payment orfor Rs. 360 cash down payment and rest in equal monthly instalments of Rs. 390 each. If the rate of interest charged is 16%,find the number of instalments.
SOLUTION Let the number of monthly instalments be n.
We have, –
Cash price of bicycle = Rs. 1500
Cash down payment = Rs. 360
Balance due (B.D.) Rs. 1500 — Rs.360 = Rs. 1140
Also,
we have
R = Rate of interest = 16 % per annum
P = Value of each instalment Rs. 390.
At the end of instalment of scheme, we must have Amount of balance due = Future value of all instalments
[latex] = 13n^2 +1861n-5700=0 \) \( = 13n^^2+1900n—39n—5?00 = 0 \) \( n (13n + 1900) -3 (13n + 1900) \) \( (n—3)(13n+1900) = 0 \) \( n-3 = 0 \)
n = 3
Hence, number of instalments = 3.