Raghav buys a shop for Rs.1,20,000.He pays half the balance of the amount in cash and agrees to pay the balance in 12 annual instalments of Rs.5000 each. If the rate of interest is 12% and he pays with the instalment the interest due for the unpaid amount. Find the total cost of the shop.

Ans:    Balance = Rs.60,000 in 12 instalment of Rs.5000 each.

Amount of I instalment  = 5000 +(12/100) 60,000

II instalment = 5000 + (Interest on unpaid amount)

= 5000 + 6600[12/100x55000]

= 11600

III instalment  = 5000 + (Interest on unpaid amount of Rs.50,000)

∴ AP is 12200, 11600, 11000

D = is 600

Cost of shop = 60000 + [sum of 12 instalment]

= 60,000 + 12/2 [24,400-6600]

= 1,66,800