Question

An online portal introduces two schemes for their customers, during a sale on a car whose price is Rs. 500000. In scheme 1 the online portal offers a discount of 20% and in scheme 2 the online portal sells the car at a down payment of Rs. 125000 with 3 equal yearly installment of Rs. 117000. Assuming that the online portal invests its money at compound interest of 10% compounded annually, which offer is more profitable for them and by how much at the end of 3 years?
1. Rs. 22255 in scheme 1^st
2. Rs. 21245 in scheme 2^nd
3. Rs. 22000 in scheme 1^st
4. Rs. 21500 in scheme 2^nd

Answer 1

Correct Answer - Option 2 : Rs. 21245 in scheme 2^nd

Given:

Price of car = Rs. 500000.

In scheme 1^st the online portal offers a discount of 20%.

In scheme 2^nd the online portal sells the car at a down payment of Rs. 125000 with 3 equal yearly installment of Rs. 117000.

The online portal invests its money at compound interest of 10% compounded annually

Formula used:

A = p (1 + R/100)ⁿ

Calculation:

In scheme 1

The S.P of car = 500000 × 8/10 = Rs. 400000

Since, the online portal invests its money at compound interest of 10%, interest is being compounded annually

So, the money earned by the online portal after 3 years = 400000 (1 + 10/100)³ = Rs. 532400

In scheme 2

Since down payment = Rs. 125000

And equal installment = Rs. 117000

So, the money earned by the online portal after 3 years

= 125000 (1.1)³ + 117000 (1.1)² + 117000 (1.1) + 117000

⇒ 166375 + 141570 + 128700 + 117000

⇒ 553645

So,

The online portal will earn (553645 – 532400) more in scheme 2

Hence, Rs. 21245 more money will be earned in scheme 2