Question
A man wants to sell his scooter. There are two offers, one at Rs. 12,000 cash and the other a credit of Rs. 12,880 to be paid after 8 months, money being at 18% per annum. Which is the better offer?
Answer: Option A
$$\eqalign{
& {\text{ = }}\,{\text{P}}{\text{.W}}{\text{.}}\,{\text{of}}\,{\text{Rs}}{\text{.}}\,{\text{12,880}}\,{\text{due}}\,{\text{8}}\,{\text{months}}\,{\text{hence}} \cr
& = Rs.\,\left[ {\frac{{12880 \times 100}}{{100 + \left( {18 \times \frac{8}{{12}}} \right)}}} \right] \cr
& = Rs.\,\left( {\frac{{12880 \times 100}}{{112}}} \right) \cr
& = Rs.\,11500 \cr} $$
Clearly 12000 in cash is a better offer.
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$$\eqalign{
& {\text{ = }}\,{\text{P}}{\text{.W}}{\text{.}}\,{\text{of}}\,{\text{Rs}}{\text{.}}\,{\text{12,880}}\,{\text{due}}\,{\text{8}}\,{\text{months}}\,{\text{hence}} \cr
& = Rs.\,\left[ {\frac{{12880 \times 100}}{{100 + \left( {18 \times \frac{8}{{12}}} \right)}}} \right] \cr
& = Rs.\,\left( {\frac{{12880 \times 100}}{{112}}} \right) \cr
& = Rs.\,11500 \cr} $$
Clearly 12000 in cash is a better offer.
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