AdminKeymaster

December 5, 2018 at 5:15 pm

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