Answer:
a) $26.4
b) $324
Step-by-step explanation:
Hire purchase is the purchase of an item which can be paid instalmentally.
The bicycle costs $300 for an instant purchase.
For a hire purchase, a $60 deposit must be made and the rest paid instalmentally over 10 months. An interest of 10% is included in the outstanding balance
The outstanding balance after paying deposit= $300 - $60 = $240
Hence, 10% of 240 = 10/100 × 240 = 24
An interest of $24 is added.
Therefore, a total of $240 + $24 = $264 will be paid for the next 10 months.
a) Hence, the amount to be paid in instalment each month is $264/10 = $26.4
b) the total cost of buying the bicycle by hire purchase= deposit amount + instalment price
= $60 + $264
= $324
Hence, a total of $324 will be paid for the bicycle by hire purchase.
N.B: $300 is the sale price + $24 interest
