Hire purchase and installment sal transaction

Rs..150000/- is the cash price of the Van purchased, If cash price is Rs. 165000/- then lower rate of interest changed accordingly

Mahantesh Biradar

CA Final

★ 92K+

12-May-22 08:22

So if cash price was 1,65,000 then it would be 162500 - 165000

Thread Starter

Harsh Mittal

CA Final

★ 1K+

12-May-22 08:24

I said here change in lower rate of interest i.e. here lower interest rate is 6per and it's NPV is 162500/- if you change that rate then automatically changed NPV(Net Present Value)

Mahantesh Biradar

CA Final

★ 92K+

12-May-22 09:21

Put it this way Cash price is the actual price of the eqp which u can buy if u pay whole amount now Hire purchase price is the total payment u do. If u purchase the same eqp in 4 years or something... If u can buy a phone costing 20k by paying 25k in 4 years - situation 1 U can buy a phone costing 18k by paying 25k in 4 years - situation 2 Which case u think the interest is lower ?

Jayakrishnan K J

CA Final

★ 25

12-May-22 09:44

I just want to know that if cash price is 1,65,000 then implicit rate calculation will be 6% + 1,62,500 - 1,65,000/1,62,500 - 1,48,000 Ã? (12 - 6) ?

Thread Starter

Harsh Mittal

CA Final

★ 1K+

12-May-22 13:40

Yes. This is the IRR formula. We have also taught the logical method without formula in AS 19.

CA Suraj Lakhotia

Admin

12-May-22 16:18