Maths Made Easy Forums Standard Finance Investments & Loans Buying On Terms

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Keymaster
Post count: 802

George sees a new TV valued at \$2480. To buy this on hire purchase he will need to pay 20% deposit and 24 monthly payments of \$105.50. a. How much deposit would George need to pay? b. How much would George pay for the TV if he chose to pay for it on hire purchase? c. What simple interest rate per annum would the hire company charge George?

a. deposit = \$2480 × 20%
= \$496

b. Total paid = deposit + repayments
= \$496 + 24 × \$105.50
= \$3028

c. balance borrowed = \$2480 – \$496
= \$1984
Interest = \$3028 – \$2480
= \$548
Interest rate = interest/loan × 100
= 548/1984 × 100 = 27.6%

27.6% for 2 years
20 ÷ 2 = 13.8% pa

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Keymaster
Post count: 802

Shakira buys a second-hand car for \$5000. She pays a \$2000 cash deposit and borrows the balance from her parents. She agrees to pay her parents \$100 each month for 3 years.
a. Calculate the total amount Shakira pays to her parents.
b. How much interest does she pay?
c. Find the annual flat rate of interest charged by Shakira’s parents.

a. Repayments = 100 × 36
= \$3600

b. Total paid for the car = 2000 + 3600
= \$5600
Interest = \$5600 – \$5000 = \$600

c. Interest rate = interest/loan × 100
= 600/3000 × 100 = 20%

20% for 3 years
20 ÷ 3 = 62/3% pa
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