1: Sandy purchases a dishwasher for R6500 on a hire purchase agreement. The agreement is that the loan is to be paid off over a

Question

2 years ago

7

1: Sandy purchases a dishwasher for R6500 on a hire purchase agreement. The agreement is that the loan is to be paid off over a

period of 3 years with equal monthly payments at an interest rate of 12% per annum. Calculate: a) The amount that Sandy will pay for the dishwasher. b) The monthly repayments. c) The total interest paid.

Mathematics

1 answer:

Contact [7] · Answer 1 · 2023-07-19T05:51:19+03:00

a) The amount Sandy will pay for the dishwasher that costs R6,500 today on hire purchase is <u>R7,772.04</u>.

b) The monthly repayments are <u>R215.89</u>.

c) The total interest paid is R1,272.04.

<h3>What is a hire purchase?</h3>

Hire purchase is a credit agreement that allows the buyer to make monthly payments in consideration of finance charges.

The total amount the buyer will pay periodically for the hire purchase is the cost (the price of the item) plus the total interest (finance charge).

These can be determined using an online finance calculator as follows:

<h3>Data and Calculations:</h3>

Cost of dishwasher = R6,500

Hire purchase terms = 3 years equal monthly payments

Interest rate = 12%

N (# of periods) = 36 months ( 3 x 12)

I/Y (Interest per year) = 12%

PV (Present Value) = R6500

FV (Future Value) = R0

<u>Results</u>:

Monthly payment = R215.89

Sum of all periodic payments = R7,772.04 (R215.89 x 36)