Rahna decided to buy a scooty that costs Rs. 40,000. The shopkeeper agreed to sell the scooty under the condition of Rs. 25,000 cash down payment of Rs. 4,000 each month for four months. Find the rate of interest at which the shopkeeper sold the scooty under the instalment scheme.

Correct option is A

Given:
Cash price = 40000
Cash down payment = 25000
Amount paid in monthly installment = 4000 $$\times$$​ 4 = 16000
Solution:
Interest charged = (25000 + 16000) - 40000 = 1000 rupees
Now, principal for first month = 40000-25000 = 15000
Principal for second month = 15000-4000 =11000
Principal for third month = 11000-4000 = 7000
Principal for fourth month = 7000-4000 = 3000
Total principal = 15000 + 11000 + 7000 + 3000 = 36000 rupees
∴ Rate of interest on 36000 rupees = 1000 × 12 × (100 / 36000) = 100/3 = 33.33%