Given: Price of the tractor is Rs. 12000. He pays ₹ 6000 cash and agrees to pay the balance in annual instalments of ₹ 500 plus 12% interest on the unpaid amount.

To find: Total cost of the tractor if he buys it at installment

Total price = 12000

Paid amount = 6000

Unpaid amount = 12000 – 6000 = 6000

He pays remaining 6000 in n number of installments of 500 each

Cost incurred by him to pay remaining 6000,

Formula used:

where a is first term, d is common difference and n is number of terms in an A.P.

Therefore,

= 10680

Total cost = 6000 + 10680 = 16680

Hence, total cost of the tractor if he buys it at installment is Rs. 16680