Question

A hire purchase contract for a sound system requires James to pay a deposit of R2 000 and to then make six monthly payments of R3 375. If the price of the sound system is R20 000, calculate the total simple interest paid and the rate of simple interest.​

Answer 1

Based on the calculation below, the total simple interest paid is R2,250 and the rate of simple interest is 12.50%.​

How do we calculate simple interest and the rate of simple interest?

These can be calculated as follows:

Balance after deposit = Price of the sound system - Deposit paid = R20,000 - R2,000 = R18,000

Total payments over six months = Monthly payment * Number of months = R3,375 * 6 = R20,250

Simple interest = Total payments over six months - Balance after deposit = R20,250 - R18,000 = R2,250

Rate of simple interest = Simple interest / Balance after deposit = R2,250 / R18,000 = 0.125, or 12.50%

Learn more about simple interest here: brainly.com/question/25845758.

#SPJ1