Question

A man wants to sell his scooter. There are two offers, one at Rs 12,000 cash and the other at a credit or Rs 12,880 to be paid after 8 months, money being at annum. Which is the better offer?

• A. Rs 12,000 in cash
• B. Both are equal
• C. Rs 12,880 at credit
• D. None of these

Answer 1

The Correct Option is A

In 1^st case the amount is Rs 12000
In 2^nd case, let the present value of money be \(x\)
\(\frac{x\times18\times8}{12\times100}+x=12880\)
\(0.12x+x=12880\)
\(x=\frac{12880}{1.12}=\) Rs\(11500\)

\(\therefore\) Rs \(12000\) in cash is the better offer.
The correct option is (A)